What’s Up (Or Down) With Equipment Finance?

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When I was penning the recent trend report for Direct Capital’s retention segment, I read a few reports about the state of the equipment finance industry. The news out of that segment is decidedly mixed, so I thought it would be worth exploring why.

The good news first. The Equipment Leasing and Finance Association, which has as good a grasp on what’s going on in the industry as anyone, says U.S. businesses have originated $6.2 billion in loans in March. That’s up 44 percent from a year ago, but even more significantly, it’s up 51 percent from February.

ELFA justifiably views that as the latest and best sign that the industry and the larger economy are back on track:

“We are on the 11th straight month of year-over-year new business volume improvement,” ELFA President and CEO William Sutton said in an interview. “We are still optimistic on the recovery progressing.”

On the other side of the coin is this report from Floyd Norris of the New York Times, who states that “construction spending remains very weak.” Presumably that gets at construction material as much as equipment, but it’s a reminder that not everyone sees sunshine and rainbows in the world of equipment finance.

Given ELFA’s considerable clout in the industry, it’s hard not to lean toward their optimism at this moment, especially because they have the figures to back it up. With nearly a year of steady growth, there’s reason to believe that the brighter picture the organization is painting is one that dovetails with reality. If the industry does reach a year of sustained growth in total volume—even as indicators like late borrowers are slower to change—it might be time to cast aside our cautiousness entirely.

Watch for those April figures. Leave your thoughts in the comments.


Photo credit to andrewatla at http://www.sxc.hu/browse.phtml?f=view&id=884206

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