Economic Strength Propels Equipment Finance Growth: ELFA

The equipment financing and leasing market has experienced several years of growth, according to data from the Equipment Finance and Leasing Association (ELFA), and is expected to see continued expansion as a result of a strong economy and a positive corporate outlook.

The ELFA published its latest Monthly Leasing and Finance Index for July, finding a 4 percent year-over-year increase in new business for the 25 equipment financiers analyzed in the report. According to president and CEO Ralph Petta, the equipment financing volume has remained “steady” amid rising interest rates and trade disputes. Low unemployment and the strength of the equities market bolster the equipment finance space, too.

“As we enter the late summer months, industry observers will be keeping a close eye on changes in credit markets as well as a flattening of the yield curve in the broader bond market, either of which could have implications for the economy in general, and in the equipment finance space in particular,” he said in a statement.

Credit approval rates for the industry increased month over month to 76.2 percent, researchers found. In a recent interview with PYMNTS, Petta said it’s natural that a strong economy and positive corporate outlook would lead to greater demand for equipment financing and leasing.

“When [corporates] are investing in their companies, they’re going to acquire assets,” he said. “It’s more of an environment where companies are feeling good about their ability to grow and expand. Where there is business optimism and confidence, we find that businesses will invest in assets and feel good about investing — and then they purchase, finance and lease equipment.”

Those assets aren’t just heavy machinery for their factories, though. Equipment financing can be a vehicle to finance IT and other technologies, supporting businesses’ digitization efforts as a whole — particularly with financiers providing 36-month terms, a complimentary span of time for upgrading equipment like laptops.

“A piece of IT equipment or laptop or server is constantly turning over, and this financing is perfect for those kinds of assets,” he said.