COVID-19 Continues To Disrupt Equipment Finance Industry

Dec. 23, 2020
New business volume dips in November.

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, shows their overall new business volume for November was $7.3 billion, down 7% year-over-year from new business volume in November 2019. Volume was down 21% month-to-month from $9.2 billion in October. Year-to-date, cumulative new business volume was down almost 6% compared to 2019.

Receivables over 30 days were 2.30%, up from 2.20% the previous month and up from 1.80% the same period in 2019. Charge-offs were 0.61%, a slight uptick from 0.60% the previous month and up from 0.43% in the year-earlier period.

Credit approvals totaled 70.4%, down from 72.3% in October. Total headcount for equipment finance companies was down 7.0% year-over-year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in December is 59.7, up from the November index of 56.1.   

“With a tumultuous election season behind us, the equipment finance industry reports slightly lower volume totals for the month. The effect of the COVID-19 pandemic on the U.S. economy surely has taken, and will continue to take, a toll on some members’ business operations,” ELFA President and CEO Ralph Petta says. “But, overall, the broader industry is performing well, with delinquencies and losses in very acceptable ranges. And, the roll out of vaccines should inject a renewed sense of optimism and hope by consumers and businesses alike, which will only bode well for our industry in the months ahead.”

Rick Matte, president and chief commercial officer. Encina Equipment Finance, LLC, says, “As we can see from the data in this month’s report, COVID-19 continues to cause disruption in the equipment finance marketplace. We have seen some industries perform very well while others have essentially fallen off a cliff. Capital spending has been cut dramatically by most businesses as they look to preserve cash or re-evaluate their future growth prospects. With all that said, now that the election is behind us combined with the delivery of two FDA approved vaccinations, the market sentiment has begun to shift despite increasing COVID cases.”

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