Propensity to Finance (2007-2008)

Study Objectives

Analyze the propensity of businesses to finance equipment purchases
Conduct primary research on businesses to determine utilization of alternative methods of equipment financing
Identify key factors that influence equipment financing
Estimate the volume of equipment financing by combining primary research with
Global InsightÕs proprietary investment spending databases

The equipment finance volume for 2006 is nearly $600 billion. Equipment financing represents 55% of the total U.S. equipment investment in 2006. [1]
Small firms (51 to 100 employees) and medium-sized firms (101 to 1,000 employees) utilize equipment finance for 74.1% and 73.3% of their purchases, respectively.
The larger the ticket size, the more likely that the equipment will be financed. Equipment priced at $5 million or more has over twice the financing share of items priced less than $25,000, (71% versus 32%).
The share of firms utilizing equipment finance for their purchases drops off sharply when annual sales are less than $1 million.
Businesses with high profits relative to sales are more likely to use equipment finance for their purchases.
Optimization of cash flow and tax advantages are the top reasons for financing equipment purchases.
Lenders/lessors have the ability to target specific segments by firm size, equipment type, ticket-size, and industry to optimize account acquisition strategy.