Leasing and Finance Association Says October Activity Up 6% Over September
Dec. 1, 2020 -The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index showed the overall new business volume for October was $9.2 billion. That is up 6% from $8.7 billion in September, down 9% year-over-year, and down almost 6% year-to-date from 2019.
The report shows economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector.
Receivables over 30 days were 2.20%, up from 2.00% the previous month and up from 2.00% the same period in 2019. Charge-offs were 0.60%, down from 0.82% the previous month and up from 0.46% in the year-earlier period.
Credit approvals totaled 72.3%, down from 72.9% in September. Total headcount for equipment finance companies was down 4.9% year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in November is 56.1, up from the October index of 55.0.
ELFA President and CEO Ralph Petta said, “To the extent that member companies responding to the October MLFI-25 survey are an indicator, the equipment finance industry shows resilience in the face of a worsening health pandemic and uneven economic performance in the U.S. The labor market continues to strengthen, except for workers and their employers in the restaurant, travel, leisure and hospitality sectors, who continue to struggle. Corporate earnings in many sectors are strong, the equity markets continue to defy gravity and business confidence seems to be on the rise. Hopefully, this struggle to get back to a sense of normalcy will not be overtaken by a double dip recession caused by worsening COVID-19 outbreaks reported in some states around the nation. At the end of the day, equipment finance companies continue to do their part to help the nation get back to business by helping finance billions of dollars in equipment investment by businesses both large and small.”
Howard Shiebler, President, Crossroads Equipment Lease & Finance LLC, said, “We focus exclusively on transportation finance, and 2020 is shaping up to be an amazing year. Freight volume and trucking market spot rates are up and corresponding demand for new and used trucks is driving our new business to record levels. We expect this trend to continue into at least the first half of 2021 and for portfolio performance and used truck and trailer prices to stay strong.”
About ELFA’s MLFI-25
The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at 8 a.m. Eastern time from Washington, D.C., each month on the day before the U.S. Department of Commerce releases the durable goods report. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants, is available at www.elfaonline.org/Data/MLFI/.
MLFI-25 Methodology
ELFA produces the MLFI-25 survey to help member organizations achieve competitive advantage by providing them with leading-edge research and benchmarking information to support strategic business decision making.
The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.
The MLFI-25 measures monthly commercial equipment lease and loan activity as reported by participating ELFA member equipment finance companies representing a cross section of the equipment finance sector, including small ticket, middle-market, large ticket, bank, captive and independent leasing and finance companies. Based on hard survey data, the responses mirror the economic activity of the broader equipment finance sector and current business conditions nationally.
About ELFA
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the nearly $1 trillion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its 575 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, please visit www.elfaonline.org.
