The Equipment Leasing & Finance Foundation released the May 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Overall, confidence in the equipment finance market improved with an index of 25.8, up from the historic low in April of 22.3.
The Foundation also released highlights of its newly launched COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry. From 101 survey responses collected from May 4-8, results show that 93% of equipment finance companies have offered payment deferrals. A large majority (88%) of companies have not furloughed or laid off employees. Comments from survey respondents follow MCI-EFI survey comments below, and additional survey results are available.
When asked about the outlook for the future, MCI-EFI survey respondent Alan Sikora, CLFP, CEO, First American Equipment Finance, said, “While there is currently much uncertainty in the world, the U.S. equipment leasing and finance industry has a history of resiliency during times of crisis. We will get through this, and many companies will innovate and emerge stronger.”
May 2020 Survey Results:
“We are seeing opportunities with customers who have not leased with us in the past as they look to conserve working capital. We are seeing an increase in restructure requests and would expect restructure requests to continue for the balance of the year,” said Michael Romanowski, president, Farm Credit Leasing“The actions by Congress and the Federal Reserve have gone a long way to increasing confidence in our economy and financial markets. This will be a long road, with losers and winners, and only time will tell how our economy and way of life is changed after this health crisis is resolved,” said Bruce J. Winter, president, FSG Capital.
Executive Comments from COVID-19 Impact Survey of the Equipment Finance Industry
“We focus on understanding how the critical use/revenue generating assets we lend against generate cash flow for our borrowers. A deeper understanding of the borrower’s business helps correlate the collateral and credit risk with the ability to repay. These fundamentals won’t change in the medium or long term but, to a certain degree, the current short-term impacts of COVID-19 cannot be mitigated in certain industries. To manage a diversified portfolio, we believe working with borrowers to fully understand how COVID-19 is currently impacting their business and may change their business going forward will be key to mitigating potential loss and recovery going forward,” said Aaron Foglesong, managing director, Indigo Direct Lending.
“In the short term, our focus is to help the recovery of clients by providing reasonable payment relief. In the medium term we will focus on staying firm on term, structures, marketable pricing, etc., so that our industry credit and business guidelines do not become inverted (too aggressive). In the long term we need to be prepared for certain industries that will go through significant consolidation or contraction due to those smaller to mid-size clients who were not able to recover,” Michael Urquhart, president and CEO, People’s Capital and Leasing.
To participate in the COVID-19 Impact Survey of the Equipment Finance Industry: Survey responses are limited to one per company. If you did not receive a survey and would like to participate, please contact Stephanie Fisher, [email protected], by May 31 to determine eligibility for inclusion in the June survey.
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