Equipment Finance Industry Confidence Takes a Step Back in February
FEB 16, 2017 - 7:09 am
Confidence in the equipment finance market is 72.2, leveling off after January’s all-time high index of 73.4, according to the Equipment Leasing & Finance Foundation’s February 2017 Monthly Confidence Index.
“With the commitment of the Trump administration to reduce regulation we expect more companies to start thinking more about expansion and the growth of their business versus a focus on regulatory compliance,” said Thomas Partridge, president of Fifth Third Equipment Finance. “Longer term concerns are over the direction of tax policies and their impact on the equipment finance industry. Any movement toward expensing capital expenditures could impact our industry. We think this is more of a 2018 issue than a 2017 issue.”
When asked to assess their business conditions over the next four months, 69.2% of executives said they believe business conditions will improve over the next four months, a decrease from 74.2% in January. There was also a slight increase in those who believe business conditions will worse (3.8% from 3.2% in January).
More than half (53.8%) of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, but that marks a noticeable decrease from 71.0% in January.
“We start the year with cautious optimism. Transaction flow is consistent; projects that had been placed on hold by our customers seem to be moving forward,” said Valerie Hayes Jester, president of Brandywine Capital Associates. “I am concerned that the political environment is still distractive and the flurry of activity in Washington since the inauguration is not providing the level of comfort we had hoped for from the current administration. Portfolios continue to perform well. Yields are still under tremendous pressure. 2017 will continue the trend of favorable credit windows and rates for customers looking to finance equipment.”
There was also a decrease in the number of the respondents who expect more access to capital to fund equipment acquisitions over the next four months. Specifically there was a drop from 19.4% to 15.4%.
When asked, 42.3% of the executives report they expect to hire more employees over the next four months, an increase from 35.5% in January.
All of the leadership surveyed evaluated the current U.S. economy as “fair.” In addition, 73.1% of the survey respondents believe that U.S. economic conditions will get better over the next six months, an increase from 61.3% in January.
In February, 65.4% of respondents indicated they believe their company will increase spending on business development activities during the next six months, an increase from 58.1% in January.
Nature abhors a vacuum. Equipment finance abhors bankruptcy. Whether in securitized or large, single-asset financings, financiers structure transactions to be “bankruptcy remote.” This article will discuss a December 2021 bankruptcy court bench ruling that found certain protective provisions to be... read more
Transitioning from a third-party originator (TPO) to closing deals on your own balance sheet can be a risky endeavor without the right tools, network and drive. Professionals within this industry make the switch for a multitude of reasons, sometimes meeting... read more