CapEx Finance Index (CFI) Frequently Asked Questions

Equipment financing activity is closely tied to business investment in capital goods, which is a key component of overall economic growth. ELFA Research determined that including CFI data in nowcasts and forecasts of national economic indicators reduced forecast errors, demonstrating that the index contains meaningful information about the broader economy's direction. The full findings are available in the CFI white paper.

The CFI is released on the last Tuesday of every month. Each release reports data for the prior month.

ew business volume (NBV) measures the total dollar amount of new equipment financing activity, both leases and loans, reported by CFI survey respondents for the most recently completed month. For leases, the amount is measured by original equipment cost. For loans, it is measured by the funded amount. NBV covers new activity for the month.

The index reports five NBV series, all of which are seasonally adjusted. The total NBV series is the sum of all respondents' volumes. The remaining four series break down activity by segment: small ticket (smaller deal sizes), banks, captives, and independents.

Many economic indicators follow predictable patterns at the same time each year. Equipment financing volumes, for example, tend to be higher in December and lower in January due to recurring factors like budget cycles, tax deadlines, and end-of-year purchasing. These recurring patterns are called seasonality.

Seasonal adjustment is a statistical process that removes these predictable patterns from the data, allowing for analysis of underlying trends and developments. Without seasonal adjustment, a predictable year-end increase in NBV could obscure underlying demand weakness. Conversely, a typical December-to-January slowdown, which occurs every year, might mask underlying strength.

The CFI is seasonally adjusted using the X-13ARIMA-SEATS program, developed and maintained by the U.S. Census Bureau. This is the same methodology used by most federal statistical agencies to adjust national economic indicators.

The release reports both seasonally adjusted and non-seasonally adjusted figures. Seasonally adjusted data are best for evaluating month-to-month changes and trends, and identifying underlying recent industry and economy-wide developments. The non-seasonally adjusted figures are best used for comparing the same month across different years.

The CFI uses concurrent seasonal adjustment. This means the seasonal adjustment model is rerun every month when new data becomes available. As the model incorporates new data, its estimate of the seasonal pattern becomes more precise, leading to small revisions to previously published seasonally adjusted values.

The alternative, used by some federal agencies, is to estimate projected seasonal factors once at the beginning of the year and hold them fixed until the next annual recalculation. This produces more stable published figures but less accurate real-time data, particularly later in the year as actual patterns diverge from the initial estimates.

Concurrent seasonal adjustment improves accuracy relative to the projected factor approach by ensuring the most recent seasonally adjusted figures are always based on the most complete picture of seasonal patterns available at the time of publication.

Aging receivables measures the percentage of an equipment finance portfolio that is past due. Respondents break their portfolio into four categories based on the length of time the loan or lease has been past due: less than 30 days, 30-60 days, 61-90 days, and over 90 days. These four categories sum to 100% of the portfolio. The "over 30 days" figure reported in the index is the sum of 30-60, 61-90, and over 90-day buckets. The denominator is total net investment as of month-end — the current value of the portfolio after removing income billed but not yet collected and excluding any receivables that haven't been billed yet.

A charge-off occurs when an institution determines that a borrower is unlikely to repay and writes off the remaining balance as a loss. Respondents report their annualized actual losses as a percentage of average net receivables for the most recently completed month. "Annualized" means the figure reflects what the loss rate would be if that month's pace continued for a full year. Respondents submit this as a pre-calculated percentage each month. The denominator is average net receivables.

The credit approval ratio is the number of applications approved as a percentage of total credit decisions submitted for the most recently completed month. Respondents report this as a pre-calculated percentage each month.

Employment is the total number of full-time equivalent employees dedicated exclusively to the ELFA member entity for the most recently completed month.

As is common in survey data, there are months in the CFI survey when some respondents are missing. When this occurs, advanced statistical techniques are used to adjust the data based on the nature of the missing responses. This ensures that month-to-month changes in the index reflect actual changes in economic conditions rather than changes in the composition of respondents.

The small-ticket series groups companies that typically finance transactions below $250,000. This subgrouping is linked to small business demand for equipment and is an important barometer of economy-wide demand for capital investments in business equipment. The index reports small ticket NBV, aging receivables, and charge-off data.

The index reports data for three types of equipment finance companies: 

• Bank-Owned Finance Company: A finance company that operates as a subsidiary of a commercial bank. It leverages the bank's capital and funding infrastructure to originate and manage equipment loans and leases, typically serving a range of customer segments aligned with the bank's broader strategic goals.
• Captive Finance Company: A wholly or majority-owned subsidiary of an equipment manufacturer, established to provide financing solutions for the purchase of the parent company's products. Captive finance companies support sales by offering tailored financing options to dealers and end-users.
• Independent Finance Company: A non-bank, non-captive finance organization that provides equipment financing using capital raised from institutional investors, private equity, and other funding sources. These companies operate autonomously and often focus on niche markets, offering flexible and innovative financing structures, with some funded by private credit.

The CFI reports NBV, aging receivables, and charge-off data for each institution type.