New business volume grew 4.4% in the equipment finance industry in 2018, according to the 2019 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association’s (ELFA). The rise was lower than the 6.9% increase achieved in 2017 but surpassed real GDP, which grew 2.9% in 2018. The reported rise in new business volume marked the ninth consecutive year that businesses increased their spending on capital equipment. The SEFA report covers key statistical, financial and operations information for the $1 trillion equipment finance industry, based on a comprehensive survey of 126 ELFA member companies.
ELFA also released a companion report to the 2019 SEFA called the 2019 Small-Ticket Survey of Equipment Finance Activity. The report, which focuses on small-ticket and micro-ticket equipment transactions among the SEFA respondents, found that new business volume in the small-ticket space grew by 9.6% in 2018.
Key findings for 2018 as reported in the 2019 SEFA include:
• New business volume grew 4.4% in 2018. By organization type, independents saw a 14.6% increase in new business volume, captives saw a 6.1% increase and banks saw a 2.9% increase. By market segment, new business volume grew 9.3% in the small ticket segment and 3.7% in middle ticket and declined 1.8% in large ticket.
• From an asset perspective, the top-five most-financed equipment types were IT and related technology services, transportation, construction, agricultural and office machines. The top five end-user industries representing the largest share of new business volume were services, wholesale/retail, transportation, agriculture and industrial and manufacturing.
• Delinquencies edged up in 2018 to 4.5%, from 4% in 2017. Delinquencies have been on the rise since 2013 when only 1.2% of receivables were over 31 day past due.
• Charge-offs also increased sharply from 0.27% of average receivables in 2017 to 1.14% in 2018.
• Credit approvals increased slightly and while the percentage of approved applications being booked dropped slightly, there was an increase in total dollars booked.
• Employment levels grew moderately by 2.1%.
PricewaterhouseCoopers LLP administered the 2019 SEFA. The results were compiled from surveys sent to 388 eligible ELFA member companies in the first quarter of 2019. A total of 126 companies submitted 2018 U.S. domestic lease and loan data.
For more information, visit: www.elfaonline.org