January new business volume was up 28 percent over January 2019, according to the Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25). Using numbers reported by 25 companies across the $900 billion equipment finance sector, the index showed their overall new business volume for January was $9.2 billion. Although volume was down 29 percent from the $12.9 billion reported in December, the group cited the typical end-of-quarter, end-of-year spike in new business activity.
“The year starts off with a bang as January new business volume increases dramatically on a year-over-year basis,” said Ralph Petta, president/CEO, in a prepared statement. “Underlying fundamentals in the U.S. economy—strong job growth, low inflation, low interest rates, continuation of a bull equities market and solid business confidence—all add up to a growing demand for productive equipment necessary to keep businesses expanding and profitable.”
Receivables over 30 days were 2.00 percent, down from 2.20 percent the previous month and unchanged from the same period in 2019. Charge-offs were 0.47 percent, down from 0.51 percent the previous month, and up from 0.35 percent in the year-earlier period.
Credit approvals totaled 76.3 percent, down from 77.1 percent in December. Total headcount for equipment finance companies was down 3.0 percent year-over-year.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in February is 58.7, easing from the January index of 59.9.
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.
Source: Equipment Leasing & Finance Association