New business volume grew 10.5% in the equipment finance industry in 2019, according to the 2020 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA). The rise in new business volume reportedly marked the 10th consecutive year that businesses increased their spending on capital equipment. The 2020 SEFA covers key statistical, financial and operations information for the $900 billion equipment finance industry, based on a comprehensive survey of 100 ELFA member companies. While the report does not reveal the impact of the COVID-19 pandemic on the equipment finance industry—as it focuses on data from fiscal year 2019—it provides insight into multiple aspects of the industry, as well as the state of the industry preceding the pandemic.
Key findings for 2019 as reported in the 2020 SEFA include:
• New business volume grew 10.5% in 2019. The rise was stronger than the 4.4% increase achieved in 2018, and considerably stronger than the growth of the nation’s GDP, reported at 2.3% for 2019 by the U.S. Department of Commerce.
• By organization type, banks saw a 12.8% increase in new business volume, independents saw an 8.4% increase and captives saw a 6.9% increase. By market segment, new business volume grew 20.0% in the large ticket segment, 9.0% in middle ticket and 8.1% in small ticket.
• From an asset perspective, the top-five most-financed equipment types were transportation, IT and related technology services, construction, agricultural and industrial/manufacturing. The top five end-user industries representing the largest share of new business volume were services, agriculture, wholesale/retail, industrial and manufacturing and transportation.
• Delinquencies edged up in 2019 to 2.1%, from 1.8% in 2018. Delinquencies have been on the rise since 2013 when only 1.2% of receivables were over 31 day past due.
• Charge-offs increased marginally overall to 0.3% of average receivables in 2019.
• Credit approvals remained steady year-over-year, as did the percentage of those approved applications being booked.
• Employment levels grew slightly by 1.2%.
ELFA also released a companion report to the 2020 SEFA called the 2020 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 5.8% in 2019.
PricewaterhouseCoopers LLP administered the 2020 SEFA. The results were compiled from surveys sent to 352 eligible ELFA member companies in the first quarter of 2020. A total of 100 companies submitted 2019 U.S. domestic lease and loan data.
For more information, visit: www.elfaonline.org
