5 Minutes with the Independent Middle Market Chair

What’s happening in the independent middle market sector of the equipment finance space? Equipment Leasing & Finance magazine recently talked to Brian Eschmann, Chair of the Independent Middle Market Business Council Steering Committee (BCSC), to take the pulse of this sector. Eschmann, President of Trans Lease, Inc., is currently serving his second year as Chair of the committee, which engages independent finance and multiline finance companies involved in transactions between $250,000 and $5 million, either individually or through lines.

Brian Eschmann
Chair, Independent Middle Market BCSC

From your perspective serving on the Independent Middle Market BCSC, what issues are independent equipment finance companies focused on this year?

Most companies in our segment continue to enjoy strong customer demand and healthy portfolios. As with most extended periods of economic expansion, competition has grown steadily as lenders have been attracted to our space and many of our companies have been able to grow our businesses. We have experienced narrowing interest rate spreads, yet we have also enjoyed low delinquencies and charge-offs, which have allowed most companies in our space to maintain desired returns. While most indicators remain positive, we are cautious for a couple of reasons. First, the inverted yield curve historically precedes a slowing of the economy in the not so distant future, and, second, the widening of credit boxes by some lenders. While most of the companies represented in the BCSC have resisted changes to our underwriting, we all have memories of how this seems to have been the case at the peak of prior cycles.

Our group did not identify a direct link to business robustness as a result of tax reform, but believe that it has combined with other positive factors such as reduced regulations and a lowering of projected interest rate hikes to spur continued confidence in the economy. Companies seem to be prepared for the lease accounting changes, but we expect that this will gain clarity as public companies implement the new standards this year prior to private companies implementing the same next year. Beyond these policy changes, members in our group are focused on streamlining operations through technology, attracting and developing new talent and implementing systems and controls to protect our businesses against rising fraud risks. Overall, we are enjoying a continuation of a historically long period of growth, but also preparing our businesses for what inevitably follows.

What do you like best about serving on a BCSC?

I have gained many new friendships and a broader perspective on the equipment finance world through my involvement in the BCSC. The diversity of our counsel combined with the entrepreneurial spirit of our members offers a unique and more complete perspective on the industry. Serving on the counsel the past few years and chairing our BCSC the last two, I have gained a deeper appreciation for and connection with all ELFA has to offer.

What’s the last book you read?

Turn the Ship Around in which L. David Marquet, a retired Navy Captain, shares his model for empowerment and creating leaders rather than forging followers.