Financing Favored by 67% of Construction Firms

Oct. 11, 2022

More than $1 trillion worth of equipment and software was financed last year, according to a new study of end users. The amount financed rose to an all-time high of $1.16 trillion, and that amount is expected to increase further this year to $1.22 trillion.

The second largest market, by percentage of users who finance, was users of construction equipment. More than 600 equipment and software users across industries from health care to manufacturing to construction responded, with nearly 100 of those in the construction vocation, according to the survey.

The study, “2022 Equipment Leasing & Finance Industry Horizon Report,” was commissioned by the Equipment Leasing & Finance Foundation and prepared by Keybridge.

Among construction end users, two-thirds (67 percent) used some method of financing to acquire equipment in 2021. One-third (34 percent) used a lease, 18 percent used a loan, and 14 percent used a line of credit, according to the survey.

Banks were the preferred vendor for 62 percent of financing, with 47 percent from a primary bank and 15 percent from a secondary bank. About 1 in 10 (13 percent) financed construction equipment through the vendor.

Financing was used rather than a cash transaction, according to 68 percent of construction respondents, in order to optimize cash flow. Other reasons were protection from equipment obsolescence, 64 percent, and tax advantages, 50 percent.

Among all 617 respondents to the July survey, 70 percent anticipate a U.S. economic recession either this year or next. One-third (34 percent) expect to acquire less equipment over the next 12 months, and 26 percent expect to acquire more.

Slightly less than half (44 percent) of all respondents said that they plan to acquire more used than new equipment, and 20 percent expect to acquire less used than new.

Among all respondents, the top external factor affecting equipment & software acquisition decisions was technology advancements and/or obsolescence, noted by 31 percent.

Source: ELFF

About the Author

Rod Sutton

Sutton has served as the editorial lead of Construction Equipment magazine and since 2001. 

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