A Look Ahead at Equipment Finance in 2018

by Vernon Tirey

Vernon Tirey, a 30-year veteran in enterprise automation solutions, is the co-founder and CEO of LeaseQ, a marketplace bringing automation and efficiency to small business borrowers looking to finance equipment to start and grow their businesses. LeaseQ’s proprietary cloud-based platform streamlines the equipment finance process for business borrowers, equipment sellers and equipment financial services companies.



Now that 2017 is coming to an end, its time to start looking at the year ahead in equipment finance. Emerging technologies and the “uberization” of the industry are two trends that will have a major effect in what should be another huge year.

2017 was an impressive and successful year for the equipment financing industry, with a 4% YTD increase in new business volume and a projected 4.3% expansion in equipment and software investment in Q4/17. As 2017 comes to a close, it’s time to ask: What can we expect from the equipment finance sector in 2018?

Expect 2018 to be another huge year for equipment financing, with continued growth in new business volume and investment in equipment and software. A sustained increase in consumer confidence means businesses will thrive and the fintech sector will prosper.

The equipment finance industry’s ongoing expansion will likely be paired with a significant shift towards implementing emerging technologies and the “uberization” of equipment. Let’s take a moment to explore these two expectations.

The Impact of Emerging Technologies

Equipment finance has given considerable lip service to emerging technologies like artificial intelligence (AI), machine learning, blockchain and cryptocurrencies in recent years. With a variety of new technologies entering the marketplace, discussions surrounding their role in the fintech sector will continue and isolated instances of implementation will likely increase.

2018 will be a year of learning about these emerging technologies and working together as an industry to create standards for how they should be used. Specifically, consider the implementation of blockchain and machine learning, which are dominating conversations in the tech space. Discussions about these technologies spark up among peers, but no one has delivered a solution in equipment financing quite yet.

A true three-party transaction utilizing blockchain technology will not be possible until the industry decides upon standards to put blockchain into practice. Lenders have lagged in adopting 20-year-old technologies such as digital documents, e-signatures and automated underwriting so without leadership from an association or a working group of industry leaders it will be some time before technology standards are published and made a reality. Consequently, working together to create industry standards for adopting new technologies for finance programs will be a lot of talk and little action for equipment financing in 2018. But talk is an encouraging step in the right direction.

As the technology powering the fintech industry changes, new financing methods are being brought to the table as well. In 2017, we have seen rental programs for equipment gaining significant traction and I expect this trend to gain momentum in 2018.

The “Uberization” of Equipment

Businesses have slowly started to adopt rental financing programs for equipment, and this trend is quickly expanding across all industries. A rental program is similar to a financing program, but at the end of term, the ownership of equipment comes back to the manufacturer. Traditional equipment sellers have started to offer rental programs as a way to rise above competitors, and provide customers easy, fast and flexible financing for equipment.

Several rental programs have arisen in the last year, but expect to see all industries adopt these types of programs rapidly in 2018. In particular, there has been a recent influx of equipment-as-a-service deals in trucking, technology, mechanical and electrical, materials handling, medtech and even point-of-sale equipment for the food and beverage space. In trucking, this is called “pay by the drip,” where operators rent a truck for a project or other length of time to avoid the large upfront cost and preserve cash. In the lighting space, lighting-as-a-service programs allow building owners to contract for up to 10 years with service companies that provide all the construction and maintenance at a guaranteed lower monthly cost.

These rental programs have quickly gained popularity among business owners, equipment sellers and lenders, and have allowed new businesses to effectively enter the marketplace. Expect these programs to proliferate in the coming year.

Final Take

In 2018, the equipment finance industry will build on its 2017 growth to reach new heights. The industry will experiment with and slowly adopt advanced technologies, and add new rental options for customers. It’s an exciting time to be part of the equipment finance sector, and all of us look forward to where this forward momentum will take us.

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