October New Business Volume Down 9 Percent Year-over-year, Up 6 Percent Month-to-Month, and Down Almost 6 Percent Year-to-date
Washington, DC, November 23, 2020—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 $900 billion equipment finance sector, showed their overall new business volume for October was $9.2 billion, down 9 percent year-over-year from new business volume in October 2019. Volume was up 6 percent month-to-month from $8.7 billion in September. Year-to-date, cumulative new business volume was down almost 6 percent compared to 2019.
Receivables over 30 days were 2.20 percent, up from 2.00 percent the previous month and up from 2.00 percent the same period in 2019. Charge-offs were 0.60 percent, down from 0.82 percent the previous month and up from 0.46 percent in the year-earlier period.
Credit approvals totaled 72.3 percent, down from 72.9 percent in September. Total headcount for equipment finance companies was down 4.9 percent 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/.
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.
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.
ELFA is the premier source for statistics and analyses concerning the equipment finance sector. Please visit www.elfaonline.org/Data/ for additional information.
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org.