ELFA’s Website Offers Wider Range of Resources for Financing Equipment

Visitors to the Equipment Leasing and Finance Association‘s end-user website, Equipment Finance Advantage, will find new enhancements that make it a more powerful resource for helping businesses take advantage of the benefits of financing equipment. The site, found at www.EquipmentFinanceAdvantage.org, has improved navigation for a better user experience and offers a wider range of resources focused on how companies of all types and sizes can use leasing and financing to their strategic advantage to acquire the equipment they need to operate and grow. ELFA launched the original Equipment Finance Advantage website two years ago.

Highlights of the site’s user-friendly content include:

  • Equipment Finance 101: Overview of the benefits of equipment finance, the types of financing, the top 10 questions to ask before entering an equipment financing agreement, a customizable digital toolkit and more.
  • Success Stories: Real-world examples of companies using equipment finance for strategic advantage.
  • Resources: How-to articles, Q&As, updated end-user industry fact sheets, infographics and more to help businesses develop their financing strategy.
  • Videos: A series of short videos on a range of topics, from maximizing cash flow to staying ahead of the curve to end-of-lease factors to consider.
  • Find a Provider: A searchable list of ELFA members that provide equipment leasing and finance services.

“The critical role the $903 billion equipment finance industry plays in the U.S. economy, manufacturing and jobs is fundamentally because of the participation of individual businesses,” says ELFA President and CEO William G. Sutton, CAE. “They have found the information at Equipment Finance Advantage to be an invaluable resource informing their equipment leasing and financing decision-making during the past two years, and we are excited to offer the newly upgraded EFA website to help keep them up-to-date with the latest research and informational content available.”

Confidence in Equipment Finance Sector Is Steady

The Equipment Leasing & Finance Foundation (the Foundation) released the December 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $903 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.4, steady with the November index of 64.2.

When asked about the outlook for the future, MCI-EFI survey respondent David Schaefer, CEO, Mintaka Financial LLC, said, “We are very pleased with our year-over-year growth in application volume, originations, approval rates and access to capital. We think next year will be positive again but expect to see slight increases in delinquency and credit losses. We have seen extraordinary portfolio performance the past three years, but we’re planning for a more normal period in 2015.”

December 2014 Survey Results:
The overall MCI-EFI is 63.4, steady with the November index of 64.2.

    · When asked to assess their business conditions over the next four months, 28% of executives responding said they believe business conditions will improve over the next four months, up slightly from 27.3% in November. 72% of respondents believe business conditions will remain the same over the next four months, up from 69.7% in November. None believe business conditions will worsen, down from 3% the previous month.

    · 22% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 30.3% in November. 72% believe demand will “remain the same” during the same four-month time period, up from 66.7% the previous month. 6.3% believe demand will decline, up from 3% in November.

    · 22% of executives expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 21.2% in November. 78% of survey respondents indicate they expect the “same” access to capital to fund business, down slightly from 78.8% in November. None expect “less” access to capital, unchanged from the previous month.

    · When asked, 43.8% of the executives reported they expect to hire more employees over the next four months, a decrease from 45.4% in November. 50% expect no change in headcount over the next four months, up from 48.5% last month. 6.3% expect fewer employees, essentially unchanged from November.

    · 3% of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. 97% of the leadership evaluate the current U.S. economy as “fair,” and none rate it as “poor,” both also unchanged from November.

    · 47% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 42.4% who believed so in November. 53% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 54.6% in November. None believe economic conditions in the U.S. will worsen over the next six months, down from 3% last month.

    · In December, 37.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 42.4% in November. 62.5% believe there will be “no change” in business development spending, an increase from 54.6% last month. None believe there will be a decrease in spending, down from 3% last month.

December 2014 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Lower energy costs will benefit consumers and small businesses. These are the segments of the economy that has been lagging compared to historical recoveries. I believe stronger spending will lift corporate revenues and, in reaction, business investment. Finally ?!” Paul Menzel, President & CEO, Financial Pacific Leasing, LLC

Bank, Middle Ticket
“Energy costs are the new looming uncertainty. In some sectors/industries this is a positive while in others it is a negative. How that balances out from a national as well as global standpoint remains to be seen, but it will give some pause to growth plans.” Harry Kaplun, President, Frost Equipment Leasing and Finance

Independent, Middle Ticket
“With gas prices declining truck and car sales continue to increase and the economy seems to continue to be slowly improving.” William Besgen, President and Chief Operating Officer, Hitachi Capital America Corp.

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

    1. Current business conditions
    2. Expected product demand over the next four months
    3. Access to capital over the next four months
    4. Future employment conditions
    5. Evaluation of the current U.S. economy
    6. U.S. economic conditions over the next six months
    7. Business development spending expectations
    8. Open-ended question for comment

How may I access the MCI-EFI?
Survey results are posted on the Foundation website included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

ELFA Reports Equipment Finance Sector Business Volume Up 13 Percent Since August 2013

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 $827 billion equipment finance sector, showed their overall new business volume for August was $7.2 billion, up 13 percent from new business volume in August 2013. Month over month, new business volume was down 9 percent from July. Year to date, cumulative new business volume increased 6 percent compared to 2013.

Receivables over 30 days increased from the previous month to 1.3 percent, and were up from 1 percent in the same period in 2013. Charge-offs were unchanged for the fifth consecutive month at an all-time low of 0.2 percent.

Credit approvals totaled 79.5 percent in August, a slight decrease from 80.3 percent the previous month. Total headcount for equipment finance companies was up 1 percent year over year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) for September is 60.2, an increase from the previous month’s index of 58.9.

ELFA President and CEO William G. Sutton, CAE, said: “Continued strength in new business volume reflects the uptick in overall economic activity most economists forecast for the second half of 2014. Solid fundamentals—modest GDP growth; an improving labor market; increased consumer spending, as evidenced by strong auto sales; and low interest rates—all bode well for continued business investment in general, and the equipment finance sector, in particular. Credit quality appears manageable as well, although the index shows a slight uptick in delinquencies. Tempering this relatively good news is concern over recent geopolitical events relating to the fight against terrorism.”

Larry R. Stevens, President and Chief Executive Officer, Med One Capital, said, “The YTD-2014 metric measured by the MLFI-25 demonstrates a solid year in the equipment finance industry. If the month-to-month trends continue for the remainder of 2014, our industry will experience the strongest new business performance since well before the beginning of the recession. The industry seems to have recovered much of the strength and momentum that was lost during the financial meltdown and resultant uncertainties experienced in 2009 and 2010. This trend is largely consistent with what we are experiencing in healthcare equipment financing. The high quality reflected in the portfolios of the reporting companies demonstrates that in the face of increasing volume, credit quality remains a high priority within our industry. If this continues, it will serve us well as pressure grows to increase new business volumes in the years ahead.”

The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is released globally at 8 a.m. Eastern time from Washington, D.C., each month on the day before the U.S. Department of Commerce releases the durable goods report. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.

The MLFI-25 is a time series that reflects two years of business activity for the 25 companies currently participating in the survey. The latest MLFI-25, including methodology and participants, is available now.

Equipment Leasing & Finance Foundation Releases February Confidence Index

The Equipment Leasing & Finance Foundation has released the February 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of the prevailing business conditions and expectations for the future as reported by key executives from the $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.3, the second highest index in two years and off slightly from last month’s two-year index high of 64.9.

When asked about the outlook for the future, MCI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, Inc., said, “I am optimistic that there is increasing demand for equipment and therefore financing to acquire that equipment. The brutal winter experienced by a significant portion of this country has slowed down many projects that would have been in progress by now. I am hoping that the last third of this quarter will show the signs we had experienced at year end, as demand increased.”

February 2014 Survey Results:
The overall MCI-EFI is 63.3, a decrease from the January index of 64.9.

    When asked to assess their business conditions over the next four months, 21.2% of executives responding said they believe business conditions will improve over the next four months, down from 33% in January. 72.7% of respondents believe business conditions will remain the same over the next four months, up from 61% in January. 6.1% believe business conditions will worsen, up from 5.6% who believed so the previous month.

    24.2% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 36% in January. 69.7% believe demand will “remain the same” during the same four-month time period, up from 61% the previous month. 6.1% believe demand will decline, up from 2.8% who believed so in January.

    31.3% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 25% in January. 65.6% of survey respondents indicate they expect the “same” access to capital to fund business, down from 75% in January. 3.1% expect “less” access to capital, up from no one who expected less access the previous month.

    When asked, 40.6% of the executives reported they expect to hire more employees over the next four months, an increase from 33% in January. 53% expect no change in headcount over the next four months, down from 58.3% last month. 6.3% expect fewer employees, down from 8.3% who expected fewer employees in January.

    3% of the leadership evaluates the current U.S. economy as “excellent,” relatively unchanged from 2.8% last month. 93.8% of the leadership evaluates the current U.S. economy as “fair,” down slightly from 94.4% last month. 3% rate it as “poor,” also relatively unchanged from last month.

    34.4% of the of survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 41.7% who believed so in January. 59.4% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 55.6% in January. 6.2% believe economic conditions in the U.S. will worsen over the next six months, an increase from 2.6% last month.

    In February, 56.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 55.6% in January. 43.8% believe there will be “no change” in business development spending, an increase from 39% last month. No one believes there will be a decrease in spending, a decrease from 5.6% who believed so last month.

February 2014 MCI Survey Comments from Industry Executive Leadership:

    Bank, Small Ticket
    “Weather has created some slow down in equipment deliveries and inventory which may slow first quarter growth.” Kenneth Collins, CEO, Susquehanna Commercial Finance, Inc.

    Independent, Middle Ticket
    “I’m conflicted about the near-term. All small to medium-size customers claim activity is sporadic and are not willing to commit capital for new equipment. Thus we see demand is off, but funding availability is strong.” George Booth, Managing Director, Black Rock Capital, LLC

    Bank, Middle Ticket
    “The economy and the equipment finance market continue to experience peaks and valleys. The good news is the valleys aren’t getting any deeper; the bad news is the peaks aren’t getting any higher. Hopefully, in 2014 the economy will gain enough confidence to break through the peaks.” Thomas Jaschik, President, BB&T Equipment Finance

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

    Current business conditions
    Expected product demand over the next four months
    Access to capital over the next four months
    Future employment conditions
    Evaluation of the current U.S. economy
    U.S. economic conditions over the next six months
    Business development spending expectations
    Open-ended question for comment

Resources to Assist with Equipment Finance

The Equipment Leasing and Finance Association has released three resources to help businesses take advantage of the benefits of equipment finance. The multimedia resources—a video, digital toolkit and an infographic—highlight how companies of all types and sizes can use leasing and financing to their strategic advantage to acquire the equipment they need to operate and grow. The tools are available on the association’s website.