Equipment Finance Industry Slumps In September

Nov. 2, 2020
Equipment Leasing and Finance Association releases Survey of Economic Activity: Monthly Leasing and Finance Index.

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 September was $8.7 billion, down 13% year-over-year from new business volume in September 2019. Volume was up 24% month-to-month from $7 billion in August. Year-to-date, cumulative new business volume was down 5% compared to 2019.

Receivables over 30 days were 2.00%, down from 2.40% the previous month and up from 1.70% the same period in 2019. Charge-offs were 0.82%, up from 0.75% the previous month and up from 0.40% in the year-earlier period.

Credit approvals totaled 72.9%, up from 71.0% in August. Total headcount for equipment finance companies was down 2.7% year-over-year. Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in October is 55.0, easing from the September index of 56.5.   

“Despite the drop in September year-over-year new business, a look at the data beginning with the advent of the pandemic in February shows that the industry, in general, is holding its own. In fact, anecdotal evidence from some ELFA member companies indicates they are enjoying a very strong year,” says ELFA President and CEO Ralph Petta. “Tempering this positive data point, however, is a spike in losses—not surprising, given that the losses, in all likelihood, reflect customers in distressed industry sectors significantly impacted by the economic downturn resulting from the COVID pandemic.”

“The pandemic continues to have a negative impact on the overall economy, and this data demonstrates that our industry is not immune. However, the 24 percent growth in month-to-month volume in the September 2020 MLFI-25 is promising,” said Anthony Sasso, Head of TD Equipment Finance.

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