The Equipment Leasing and Finance Association (ELFA) held its 2025 National Funding Conference in Chicago in April, convening capital providers, lenders and equipment leasing industry leaders. Rick Ross, President of Summit Funding Group, was there and shares his takeaways from the conference as well as his insights on the equipment leasing industry today.

Main Conference Topics

The main subject discussed was how to create new business in today’s economic environment. The outlook was positive, despite current headwinds, including rates, waiting on a new tax law and all the unknowns regarding tariffs.

Tariff Threats & Possible Economic Downturn

Most conference-goers were not overly concerned about the effects of tariffs or a potential economic slowdown. I’ve been doing this since 1981, when prime was 21%, and we still did business, and while e a few people “thought the world was coming to an end,” the majority were proceeding with business as usual.

Despite the overall positive attitude at the conference, some customers have canceled or delayed orders, but not because of the threat of tariffs. Instead, I believe lessees are holding off on expenditures until a new tax law is passed and in the hope that interest rates will fall.

Who’s being hit hardest?

Prior to the tariff talk, some industries were already being challenged by high interest rates and wage increases, including transportation and automotive. They will be hit hardest by any tariff actions. In the auto industry, small suppliers are often affected first, and lessors have seen some softening in that area, with some customers stretching out the timeline for orders and even a few declaring bankruptcy.

The biggest question is how much the actual cost of tariffs will be. There are so many starts and stops on when they begin and how much they are going to be. Can anybody tell me what a true tariff is on anything? Because so many parts are made from so many countries with different tariff rates, it can be difficult to determine what the final tariff amount on a finished product would be. More importantly, it is simply too early to tell what the exact effects of the tariffs are going to be.

Will the tariff threats slow business down?

Companies still have inventory to go through; once those have been used up and tariff amounts are finalized, slowdowns might be seen. Take a vitamin and supplement manufacturer that uses ingredients which are currently on a ship that hasn’t even left China yet; while they still have raw materials, their business operates as usual, but if they can’t get their supplies in, their business will be adversely affected.

The leasing industry isn’t feeling a lot of pressure because everything they finance is already here in the U.S. If problems do occur, they will hit customers in the form of supply chain disruptions.

Future Opportunities & Threats

China and AI as the two biggest factors coming at the industry. With China’s involvement in so many parts of the world economy – ships, retail products, food and drug ingredients, aluminum, steel and more — whatever they do impacts U.S. businesses either directly or indirectly. As such, they impact customers’ needs for equipment. I’m confident the current trade battles will get settled, though. Things like this typically get resolved for one reason: because they have to.

AI as an issue that must be dealt with proactively. There is a huge need for infrastructure to support AI, including grids, servers and electricity production. This is a “perfect play” for public-private partnerships, with government providing incentives to push private sector investments into building up the AI infrastructure.

Changes in Leasing Trends

Several years ago, operating leases were popular because they provided the cheapest cash flow for the equipment a lessee needed, due to residuals at the end of the lease. Customers increasingly prefer to own equipment, so they’re leaning more toward operating leases with a fixed purchase option. Customers see a piece of equipment as a 10-year asset with three-year financing, and their return on the asset goes up rapidly in the last six or seven years.

Bigger customers with contracts, such as a three-year contract to make seats for an automobile manufacturer, are more likely to go with a three-year lease because they expect their need for the equipment to end along with the contract. Smaller companies tend to prefer a lease structured toward ownership. Also, when 100% bonus depreciation was instituted, many lessees preferred leases with purchase options so they would get the tax benefit on their books, essentially an interest-free loan from the government.

What do customers want from their lessors?

In a word, consistency. They want to know when they call you that a) you’ll be there and b) you’re going to be in the market, even if you’re not the cheapest. Availability and consistency of responsiveness are what customers look for.

 Tips for Customers Dealing With Uncertainty

The biggest thing to pay attention to is the unknown. Trying to run a business without knowing what the cost of borrowing will be or where or when shipments will arrive is difficult. The best way to face uncertain times according to Ross is to stick with what one knows. Don’t experiment too much or go too far outside the box of your expertise. Instead, focus on being aware of what’s going on. Put your antennae up, and when you start to notice things happening, you’ll be able to fix or deal with issues when other people don’t.

Rick Ross is President of Summit Funding Group, which prides itself on providing that availability and consistency. The company has been profitable for every one of its 32 years in business, through all types of economic cycles, including the Great Recession, the dot-com bust, COVID and the liquidity crisis. Summit’s formula for success is to be dependable, available, consistent and fair, while providing unmatched personal service. Summit’s goal is to always overdeliver.