The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross-section of the $1 trillion equipment finance sector, showed that new business volume for October was $11.3 billion, up 6% year-over-year from new business volume in October 2021. Volume was up 11 percent from $10.2 billion in September. Year-to-date, cumulative new business volume was up nearly 6 percent compared to 2021.
Receivables over 30 days were 1.7%, up from 1.5% from the previous month and unchanged from the same period in 2021. Charge-offs were 0.18%, up from 0.17% the previous month and up from 0.16% in the year-earlier period.
Credit approvals totaled 77%, down from 77.3% in September. The total headcount for equipment finance companies was down 4.7% year-over-year.
“The equipment finance industry demonstrates its typical resilient nature, producing an increase in October new business volume despite months of interest rate hikes brought on by the Fed’s efforts to control inflation. Despite the specter of an imminent recession—as many economists predict—equipment finance organizations continue to do what they do best, i.e., help supply the nation’s businesses with productive assets that enable them to survive and thrive.”
“By now there should be some consensus amongst economists and industry vets alike that the economy slowing down is not only predictable but intended—and necessary. We see it coming and know it's close. We just won't know what the severity and duration will be until we come out on the other side. Despite the rhetoric from drama-driven sources, it's unlikely that the sky will fall given our current quantitative tightening policies and practices. Tough, yes. Global economic catastrophe, probably not. We see the economic tightening as an opportunity for carriers to get back on track with normal equipment replacement cycles that have been postponed and explore new verticals. Business reorganizations will require lenders to adapt to changing practices and operations. It will not be business as usual for the foreseeable future, so it is our role as lenders and financing consultants to help manage difficult situations."