The economy is a giant waterfall and small business finance providers – in many respects – sit at the bottom of that waterfall.
- The confidence of finance companies can’t improve until the confidence of small business owners improves and, in turn, they begin to invest in their businesses.
- The confidence of small business owners, however, can’t improve without their customers buying more goods and services.
- And, consumers don’t buy goods and services until they become confident in the direction of the economy.
So, overall it is good news for everyone that finance companies are beginning to express confidence in the economy.
Everyone is aware of what a difficult year 2009 was for virtually all industries. However, Direct Capital has stayed optimistic through the turmoil by refusing to participate in the recession. Our persistence and performance led to the renewal and addition of three financing facilities in 2009 (something that was unheard of in our industry last year).
While we’d like to take credit for the improvement in the Equipment Leasing & Finance Foundation monthly confidence index (shown below), the real credit belongs to small business owners who are now beginning to display their confidence by buying equipment and investing in their business. As shown below, this activity is boosting the confidence of the equipment finance industry as reflected by the index’s 4th quarter boost. In January, however, the Index flattened out to remain virtually unchanged.
Looking at the details behind the survey, there are some notable items that suggest reason for optimism in 2010 (their summary is available on the Lease Foundation’s website):
- 42.5% of equipment leasing executives believe conditions will improve through the first four months of 2010, up from 31.1% in December
- In December, approximately 2/3 of respondents believe conditions will remain the same. In January this dropped to 55% with much of that change shifting to a belief that conditions will improve.
- Only 2.5% believe conditions will worsen.
Let us know if your confidence mirrors the survey results discussed here.