Uncategorized Archives - Equipment Leasing & Finance Foundation

Equipment Finance Industry Maintains High Confidence in October

Washington, DC, Oct 17, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the October 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 61.8, steady with the September index of 61.9, which was the highest level since January 2022. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector.

When asked about the outlook for the future, MCI-EFI survey respondent Brent Hall, CLFP, Senior Vice President, Alliance Funding Group, said, “The future for the American economy actually looks bright compared to the international scene, and manufacturing will continue to re-shore with increasing need for capital spending.”

October 2024 Survey Results:
The overall MCI-EFI is 61.8, steady with the September index of 61.9.

When asked to assess their business conditions over the next four months, 37.9% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 40% in September. 51.7% believe business conditions will remain the same over the next four months, relatively unchanged from 52% the previous month. 10.3% believe business conditions will worsen, up from 8% in September.
44.8% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 44% in September. 41.4% believe demand will “remain the same” during the same four-month time period, down from 52% the previous month. 13.8% believe demand will decline, an increase from 8.4% in September.
27.6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 24% in September. 72.4% of executives indicate they expect the “same” access to capital to fund business, down from 76% last month. None expect “less” access to capital, unchanged from the previous month.
When asked, 24.1% of the executives report they expect to hire more employees over the next four months, an increase from 20% in September. 65.5% expect no change in headcount over the next four months, down from 68% last month. 10.3% expect to hire fewer employees, down from 12% in September.
6.9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 93.1% evaluate the economy as “fair,” down from 96% in September, while none evaluate it as “poor,” a decrease from 4% last month.
37.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 24% in September. 51.7% indicate they believe the U.S. economy will “stay the same” over the next six months, down from 76% last month. 10.3% believe economic conditions in the U.S. will worsen over the next six months, an increase from none the previous month.
In October, 34.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 36% the previous month. 55.2% believe there will be “no change” in business development spending, down from 56% in September. 10.3% believe there will be a decrease in spending, up from 8% last month.

October 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“With the upcoming election close and the Fed starting the cycle of rate cuts, the uncertainty around these specific concerns will lessen. I think this will help business get back to work solving their customers’ problems and increase investment in capital equipment. Additionally, equipment finance companies, specifically within the bank segment, have unfrozen and are actively investing in the equipment finance sector providing needed access to capital at more attractive rates.” David Normandin, CLFP, President and Chief Executive Officer, Wintrust Specialty Finance

Bank, Large Ticket
“Lower interest rates will ignite capex for smaller companies that have been on the sidelines for a few years and need to add or replace equipment for growth. Getting past the election should provide some clarity on the economic direction of the U.S., thus more capex investments can be made. Lastly, onshoring will continue to promote infrastructure investment which requires capex spending to execute.” Jeffry Elliott, CLFP, President, Huntington Equipment Finance

Captive, Small Ticket
“The Fed’s intent to lower interest rates combined with stabilizing of inflation will stimulate investment, spending and expansion.” Jim DeFrank, EVP and Chief Operating Officer, Isuzu Finance of America, Inc.

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/. Details about the MCI, including who participates, how it’s designed, and the survey respondent demographics are also available at the link above.

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ABOUT THE FOUNDATION
The Equipment Leasing & Finance Foundation is a 501c3 non-profit organization that propels the equipment finance sector—and its people—forward through industry-specific knowledge, intelligence, and student talent development programs that contribute to industry innovation, individual careers, and the advancement of the equipment leasing and finance industry. The Foundation is funded through charitable individual and corporate donations. Learn more at www.leasefoundation.org

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

University of North Texas G. Brint Ryan College of Business Partnering with CLFP Foundation and Equipment Leasing & Finance Foundation to Launch Commercial Equipment Finance Course

October 17, 2024—The Department of Finance, Insurance, Real Estate and Law (FIREL) of the G. Brint Ryan College of Business at the University of North Texas (UNT) has announced a partnership with the Certified Lease & Finance Professional Foundation and the Equipment Leasing & Finance Foundation to launch a new course on commercial equipment finance. The course, FINA 4700-Survey of Commercial Equipment Leasing & Finance, will begin in spring 2025.

This course will use The Certified Lease & Finance Professionals’ Handbook for the textbook, and will cover foundational concepts, origination topics, and operations and servicing areas. Upon successful completion, students will be awarded the Certified Lease & Finance Professional (CLFP) Student Certification.

The Equipment Leasing & Finance Foundation is providing financial support and resources, including academic scholarships, internship opportunities, and networking events. This partnership is a natural alignment with the Foundation’s Campus to Career academic outreach program created to raise awareness for student talent development and provide learning and connection opportunities through resources for both students and employers.

The program was developed by Michael P. Gallo, B.Fin., M.Fin., J.D., Lecturer Professor at FIREL and 35-year veteran of the industry having held positions in sales, management and legal, and is currently associated with Padfield & Stout, LLP. “This collaboration supports a comprehensive academic program in commercial equipment leasing and finance that bridges the gap between academia and industry, preparing the next generation of professionals,” Gallo said. “It creates a platform for students to gain real-world insights and hands-on experience, positioning them for successful careers.”

The program also provides direct access to top talent, enabling equipment finance companies to:

Engage with the program and students.
Identify future professionals with industry knowledge and CLFP Student Certification.
Benefit from students skilled in foundational concepts, origination, and operations.
Ensure a steady pipeline of qualified graduates ready to contribute to the industry’s success.

Future plans for the program include expanding to other colleges and universities across the country to facilitate wider access.

The G. Brint Ryan College of Business offers a special thanks to Kirk Phillips, President & CEO of Wintrust Commercial Finance, for his critical role in providing industry leadership and spearheading efforts to foster support for this groundbreaking program.

Companies can support the program by posting their open internship opportunities at the Equipment Leasing & Finance Foundation’s Internship Resources page: https://www.leasefoundation.org/campus-to-career/internship-resources-page/ . Others wishing to participate in the program can contact Professor Gallo at 972.358.4213, Michael.gallo@unt.edu

ABOUT University of North Texas G. Brint Ryan College of Business
As one of the largest business schools in the nation, the University of North Texas (UNT) G. Brint Ryan College of Business serves over 9,000 students and has been AACSB-accredited since 1961. UNT is ranked among the nation’s top-tier research universities as per the Carnegie Classifications. Partnerships at UNT’s Ryan College of Business strengthen programs while providing industries valuable connections to students. The blend of classroom instruction, practical experience, and financial incentives creates a dynamic learning environment. With the support of the Dallas economy, this course will boost students’ career prospects and contribute to industry growth. Learn more at https://cob.unt.edu/

ABOUT THE CLFP FOUNDATION
The CLFP Foundation is a certification institute for the leasing and finance industry. It promotes the highest standard of professionalism within the industry by providing an objective, rigorous, and comprehensive certification program. The CLFP designation identifies an individual as a knowledgeable professional to employers, clients, customers, and peers in the commercial equipment finance industry. There are Certified Lease & Finance Professionals and Associates located throughout the United States (including Puerto Rico), Canada, India, Pakistan, Africa, and Australia. For more information, visit http://www.CLFPFoundation.org.

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Equipment Finance Industry Confidence Up Again in September

No executives surveyed expect U.S. economic conditions to worsen over next six months

Washington, DC, September 19, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the September 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 61.9, an increase from the August index of 58.4, and the highest level since January 2022. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector.

When asked about the outlook for the future, MCI-EFI survey respondent Nancy Pistorio, President, Madison Capital, said, “Many firms, particularly small and medium-sized businesses, have been delaying equipment purchases, citing continued high interest rates and uncertainty about the economy amplified by the upcoming election. This ‘let’s wait and see what happens’ mindset has contributed to diminished demand for equipment financing. Assuming the Federal Reserve lowers rates this fall, and once the election is behind us, I think we will begin to see an increase in business volumes. Barring any prolonged adverse reaction from the financial markets to the election outcome, I anticipate a more robust December and first quarter 2025 for our industry.”

September 2024 Survey Results:
The overall MCI-EFI is 61.9, an increase from the August index of 58.4.

When asked to assess their business conditions over the next four months, 40% of the executives responding said they believe business conditions will improve over the next four months, an increase from 37.5% in August. 52% believe business conditions will remain the same over the next four months, up from 45.8% the previous month. 8% believe business conditions will worsen, down from 16.7% in August.
44% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 41.7% in August. 52% believe demand will “remain the same” during the same four-month time period, up from 37.5% the previous month. 4% believe demand will decline, a drop from 20.8% in August.
24% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 20.8% in August. 76% of executives indicate they expect the “same” access to capital to fund business, up from 75% last month. None expect “less” access to capital, down from 4.2% the previous month.
When asked, 20% of the executives report they expect to hire more employees over the next four months, a slight decrease from 20.8% in August. 68% expect no change in headcount over the next four months, down from 70% last month. 12% expect to hire fewer employees, up from 8.3% in August.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 96% evaluate the economy as “fair,” up from 91.7% in August, while 4% evaluate it as “poor,” down from 8.3% last month.
24% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 37.5% in August. 76% indicate they believe the U.S. economy will “stay the same” over the next six months, a jump up from 41.7% last month. None believe economic conditions in the U.S. will worsen over the next six months, a decrease from 20.8% the previous month.
In September, 36% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 33.3% the previous month. 56% believe there will be “no change” in business development spending, down from 62.5% in August. 8% believe there will be a decrease in spending, up from 4.2% last month.

September 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“I am optimistic for 2024 and 2025 as opportunities are in solid supply if you have liquidity to fund and scale your balance sheet. While there are many examples of uncertainty to point to today, I find businesses are adapting and finding ways to win and it is an opportunity for us to adapt and grow with them. Even with solid liquidity, delinquency and portfolio performance are challenging for many, so credit discipline is required more now than over the last few years.” David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance

Independent, Small Ticket
“There is still concern of the risk that the Fed will not be able to guide to a soft landing and inflation will remain sticky. Consumer debt and U.S. debt levels are unsustainable.” Mark Bonanno, President and COO, North Mill Equipment Finance

“Interest rates should begin to fall this month and the federal election is around the corner. We expect business activity will begin to improve soon.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

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New Foundation Study Examines Competitive Roles of Bank and Independent Lessors

Private Capital Involvement Expected to Increase

Washington, DC, September 18, 2024– In the wake of U.S. bank failures in spring 2023 many banks, which represent the largest share of new business volume among lessor types, pulled back from equipment finance activity.

A new report, “The Changing of the Guard: The Evolving Roles of Banks and Independents in Equipment Finance,” released by the Equipment Leasing & Finance Foundation (Foundation) evaluates the current and expected competitive landscape for both banks and independent equipment finance companies in the $1 trillion equipment finance industry. It also assesses the increasing importance of the asset management sector in equipment finance, which includes private equity (PE) firms, credit funds, business development companies, and family offices.

The report was commissioned by the Foundation and prepared by management consulting firm FIC Advisors, Inc. The findings are based upon multiple interviews with equipment finance leaders, a review of recent survey results and other research, as well as FIC Advisors’ client experience.

The six key summary takeaways derived from the report are:

Many banks appear hesitant about their commitment to equipment finance and are reducing their exposure. At the same time, a smaller number of banks are beginning to reengage and grow equipment finance assets.
Banks continue to face deposit shrinkage.
Independents are in a stronger competitive position than they have been for many years; however, access to funding and capital, critical to their success, are available only to the stronger performers.
Private funds, in particular PE firms, are playing an increasing role, primarily with Independents.
Credit quality has declined from previous years.
The current M&A market shows little activity. Analysts do not expect a rebound until at least 2025.

“We have seen dramatic shifts in the industry over the last year as banks have reduced their equipment finance exposure, creating an opening for independent providers to grow their market share,” said Valerie Gerard, Foundation Research Committee Chair and Co-CEO of The Alta Group. “This study provides a comprehensive examination of how banks and independents are navigating market volatility and opportunities in their respective sectors, emerging trends and likely operating options for these groups over the next few years. The insights are invaluable to equipment finance practitioners for their business strategy and decision-making, as well as advisors and vendors to the industry.”

Download the full report at https://www.store.leasefoundation.org/cvweb/cgi-bin/msascartdll.dll/ProductInfo?productcd=BankIndependent2024.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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Foundation 2024 Industry Future Council Report Provides Guidance for Innovation and Experimentation in Equipment Finance

Washington, DC, September 12, 2024–Advancing its mission to be the equipment finance industry’s “eye on the future,” the Equipment Leasing & Finance Foundation (Foundation) releases the “2024 Industry Future Council (IFC) Report: Promoting Innovation and Experimentation in Equipment Finance.” The study focuses on the large, growing role of technology and innovation in the equipment finance industry, and the risks and opportunities associated with them over the next three to five years.

The facilitated discussions of this year’s IFC participants identified three key areas to consider in developing the strategy for a company’s optimal level of technology deployment and innovation:

Customer preferences for personalized engagement – The study reveals that 80% of customers say that the experience a company provides is as important as the actual products and services they provide, and 78% expect companies to adapt to their changing needs and preferences.
Employee experimentation with new technologies in a structured, coordinated manner – Equipment finance firms must be willing to experiment and innovate to stay competitive, and need a defined innovation strategy that prioritizes experimentation that’s not at the expense of a firm’s core strengths.
Cybersecurity risk recognition and management – Building on previous work commissioned by the Foundation on cybersecurity practices and combatting fraud, the IFC concluded that an effective cybersecurity posture requires a combination of people, processes, and technologies.

The study presents three main sections to guide organizations in addressing these issues:

Section 1 describes how equipment finance firms are using technology to interact with their customers and clients more effectively, and promising tools and practices currently used by some IFC member companies.
Section 2 discusses the importance of experimenting with new technologies using the “Innovation Curve” as a conceptual framework, and provides the IFC’s views on generative artificial intelligence and blockchain, two hot technologies receiving outsized attention.
Section 3 summarizes vulnerabilities businesses may face with new technologies, and describes potential strategies for defending organizations against cybersecurity threats.

“While the equipment finance industry has traditionally been slow to adopt cutting-edge technology, our future success relies on our ability to embrace new advancements,” said Zack Marsh, Chair of the Equipment Leasing & Finance Foundation and SVP, Accounting and Analysis, AP Equipment Financing. “The Foundation hopes that the IFC’s work influences equipment finance leaders to develop their own innovation strategies that lead to increased experimentation with emerging technologies so the industry is better positioned to thrive in the years ahead.”

This year’s IFC report was written by Keybridge, an economics and public policy research firm selected to facilitate the 2024 IFC. The IFC is comprised of a cross-section of equipment finance industry executives who participated in a full group brainstorming session and four breakout team sessions to further facilitate discussion.

The Foundation is grateful to the 2024 IFC sponsors, Equifax, LTi Technology Solutions, and Solifi.

The IFC Report is available for free download at https://bit.ly/ELFFIFC.

All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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Equipment Finance Industry Confidence Highest in More Than Two Years

Washington, DC, August 21, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the August 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. Overall, confidence in the equipment finance market is 58.4, an increase from the July index of 50.7, and the highest level since February 2022. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector.

When asked about the outlook for the future, MCI-EFI survey respondent Jeff Elliott, President of Huntington Equipment Finance, said, “Our overall confidence in the near-term future of the industry is high. We’re expecting economic conditions for businesses to improve over the next six months as interest rates decline and investment in U.S. manufacturing continues to grow, which in turn will lead to rising demand for funding to complete capex projects.”

August 2024 Survey Results:
The overall MCI-EFI is 58.4, an increase from the July index of 50.7.

When asked to assess their business conditions over the next four months, 37.5% of the executives responding said they believe business conditions will improve over the next four months, an increase from 3.9% in July. 45.8% believe business conditions will remain the same over the next four months, down from 76.9% the previous month. 16.7% believe business conditions will worsen, down from 19.2% in July.
41.7% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 11.7% in July. 37.5% believe demand will “remain the same” during the same four-month time period, down from 73.1% the previous month. 20.8% believe demand will decline, an increase from 15.4% in July.
20.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 19.2% in July. 75% of executives indicate they expect the “same” access to capital to fund business, down from 76.9% last month. 4.2% expect “less” access to capital, relatively unchanged from 3.9% the previous month.
When asked, 20.8% of the executives report they expect to hire more employees over the next four months, a decrease from 23.1% in July. 70.8% expect no change in headcount over the next four months, up from 69.2% last month. 8.3% expect to hire fewer employees, up from 7.7% in July.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 91.7% of the leadership evaluate the current U.S. economy as “fair,” up from 84.6% in July. 8.3% evaluate it as “poor,” down from 15.4% last month.
37.5% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 19.2% in July. 41.7% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 57.7% last month. 20.8% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 23.1% the previous month.
In August, 33.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 19.2% the previous month. 62.5% believe there will be “no change” in business development spending, down from 73.1% in July. 4.2% believe there will be a decrease in spending, down from 7.7% last month.

August 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Interest rates are expected to decrease shortly. Historically when this happens businesses tend to increase their capex spending. I believe there is pent-up demand in several sectors that are waiting for this interest rate reduction to happen. Interest rates typically impact transactional business and equipment finance is one of those industries.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. a division of Peoples Security Bank and Trust Company

Bank, Middle Ticket
“Leasing’s value proposition is strong in today’s economic environment. We are starting to see cracks emerge in some parts of our market, not in an alarming or unanticipated way, as we have been anticipating them for some time, but it is notable that we are finally seeing some weakness appear.” Jason Lueders, President, Farm Credit Leasing

Independent, Small Ticket
“The equipment finance industry ebbs and flows; it always has and always will. That said, it is a very resilient, creative and opportunistic industry, and rarely can get derailed. Many truly believe the best is yet to come as we navigate the winding road.” Adrian Hebig, Chief Corporate Development Officer, Channel

“I believe the worst is behind us now, and I expect the Fed Fund rate will be cut by a quarter of a point in September. Between now and the end of the year we should experience a gradual improvement in the economy.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

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Equipment Finance Industry Confidence Steady in June

Washington, DC, June 20, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the June 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 50.2, steady with the May index of 50.7.

When asked about the outlook for the future, MCI-EFI survey respondent David Normandin, President and Chief Executive Officer, Wintrust Specialty Finance, said, “The stress the industry is experiencing in small business lending continues with elevated bankruptcy, delinquency, and a softening of credit quality. It is important to remember during these times that well-positioned businesses actually grow, take share of wallet, and expand. Our industry is well positioned to help continue the success of these businesses, as well as help those struggling through a rough time in the economy. I am optimistic that in a couple of years we will look back and recognize the positive impact we were able to have on the economy and the small business community.”

June 2024 Survey Results:
The overall MCI-EFI is 50.2, steady with the May index of 50.7.

When asked to assess their business conditions over the next four months, 11.5% of the executives responding said they believe business conditions will improve over the next four months, relatively unchanged from 11.1% in May. 76.9% believe business conditions will remain the same over the next four months, down from 77.8% the previous month. 11.5% believe business conditions will worsen, also relatively unchanged from May.
7.4% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 11.1% in May. 77.8% believe demand will “remain the same” during the same four-month time period, down from 81.5% the previous month. 14.8% believe demand will decline, an increase from 7.4% in May.
19.2% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in May. 73.1% of executives indicate they expect the “same” access to capital to fund business, down from 77.8% last month. 7.7% expect “less” access to capital, relatively unchanged from the previous month.
When asked, 25.9% of the executives report they expect to hire more employees over the next four months, an increase from 22.2% in 66.6% expect no change in headcount over the next four months, down from 74.1% last month. 7.4% expect to hire fewer employees, up from 3.7% in May.
3.9% of the leadership evaluate the current U.S. economy as “excellent,” up from none the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 85.2% in May. 19.2% evaluate it as “poor,” up from 14.8% last month.
14.8% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, up from 7.4% in May. 48.2% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 63% last month. 37% believe economic conditions in the U.S. will worsen over the next six months, an increase from 29.6% the previous month.
In June, 14.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 11.1% the previous month. 77.8% believe there will be “no change” in business development spending, down from 81.5% in May. 7.4% believe there will be a decrease in spending, unchanged from last month.

June 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“I’m a believer that we can control our own optimism by recognizing where opportunities lie, asking what customers want, and then creating a realistic plan and executing it with a frequent follow-up process.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. (FNCB Bank)

Independent, Large Ticket
“Optimism is based on business initiatives to invest in new technologies and applications, but I believe, at a macro level, the headwinds are stronger than the tailwinds at the moment.” Jonathan Albin, Chief Operating Officer, Nexseer Capital

“The continuation of supply chain issues has led to further delay of new equipment deliveries, putting additional pressure on supply of equipment in our verticals relative to market demand.” Glenn Davis, CEO, RESIDCO

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Equipment Finance Industry Confidence Lower in May

Washington, DC, May 16, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the May 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 50.7, a decrease from the April index of 52.9.

When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, President, FSG Capital, Inc., said, “This year, the story of our industry centers on the availability of funding, creating a world of ‘haves’ versus ‘have nots.’ Undoubtedly some active funders today will become ‘have nots’ as their traditional funding mechanisms change. This will create substantial opportunities for strong and experienced participants to pick up not only market share, but more importantly, key personnel that have become displaced from their historical employers. Making the right move(s) now in this time of market disruption will allow these entities to grow and diversify their businesses while others are unable.”

May 2024 Survey Results:
The overall MCI-EFI is 50.7, a decrease from the April index of 52.9.

When asked to assess their business conditions over the next four months, 11.1% of the executives responding said they believe business conditions will improve over the next four months, a slight increase from 10.7% in April. 77.8% believe business conditions will remain the same over the next four months, down from 85.7% the previous month. 11.1% believe business conditions will worsen, an increase from 3.6% in April.
11.1% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 7.1% in April. 81.5% believe demand will “remain the same” during the same four-month time period, down from 92.9% the previous month. 7.4% believe demand will decline, an increase from none in April.
14.8% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 14.3% in April. 77.8% of executives indicate they expect the “same” access to capital to fund business, up from 71.4% last month. 7.4% expect “less” access to capital, down from 14.3% the previous month.
When asked, 22.2% of the executives report they expect to hire more employees over the next four months, an increase from 17.9% in 74.1% expect no change in headcount over the next four months, up from 71.4% last month. 3.7% expect to hire fewer employees, down from 10.7% in April.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 85.2% of the leadership evaluate the current U.S. economy as “fair,” down from 92.9% in April. 14.8% evaluate it as “poor,” up from 7.1% last month.
7.4% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 17.9% in April. 63% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 71.4% last month. 29.6% believe economic conditions in the U.S. will worsen over the next six months, an increase from 10.7% the previous month.
In May, 11.1% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 17.9% the previous month. 81.5% believe there will be “no change” in business development spending, up from 78.6% in April. 7.4% believe there will be a decrease in spending, up from 3.6% last month.

May 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Businesses will always need equipment. There may be a few less buyers, but in times like these there is less competition as lenders pull back so it evens out. Having a strong sales team to find those buyers and the right program structure to attract those buyers is key.” Donna Yanuzzi, EVP, 1st Equipment Finance, Inc. (FNCB Bank)

Bank, Middle Ticket
“The delay of expected or hoped-for interest rate reductions seems to be leading some entities to reconsider capital projects. To date, volume and credit quality have held up, but it’s not clear what the future will hold.” Jason Lueders, President, Farm Credit Leasing

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Q2 2024 Equipment Leasing & Finance Industry Snapshot Now Available

The Equipment Leasing & Finance Foundation has released the Q2 2024 Equipment Leasing & Finance Industry Snapshot, an indispensable information resource for industry participants. Designed for use in executive briefings and presentations, the presentation slide deck summarizes the current conditions and projections for the U.S. economy and equipment finance industry with clear, easy-to-digest charts and short narratives of key trends.

Among the wide range of details in the Q2 2024 Snapshot:

The Foundation projects that the U.S. economy will grow by 2.3%.
- The U.S. economy had another strong quarter in Q4 2023 with 3.4% SAAR growth. Consumer and government spending boosted growth and investment, while the labor market remained strong.
- Both job growth and consumer spending are expected to slow in 2024, but remain healthy while inflation inches toward the Fed’s 2% target over the course of the year.

Economic tailwinds include:
- Easing energy prices have put downward pressure on inflation over the last year due to record-high U.S. production levels for both oil and natural gas. Though oil prices have been more turbulent, prices may soon start on a path of gradual decline given softening global demand projections.
- Job growth continued in Q1, while wage growth outpaced inflation. The labor market remains the U.S. economy’s strongest tailwind, and appears to be at lower risk of overheating, which is a positive sign for containing inflation.

Economic headwinds include:
- Softening new vehicle sales are a sign that consumer spending appears likely to slow this year. On the bright side, reduced demand may lead to lower prices.
- Sluggish global economic growth as the IMF forecasts 2024 global growth of 3.1%. This is slightly lower than 2023 and well below the historical average, with challenges particularly acute in the Eurozone and China. Geopolitical conflict remains a risk, and has significant implications for energy markets and global supply chains.

A factor to watch is a consumer spending slowdown.
- Consumer demand has been robust over the last four years, driving the U.S. economic recovery.
- Spending growth is catching up with income growth, driving the personal savings rate downward. Meanwhile, revolving debt is rising quickly, and student loan payments have now resumed.
- A spending slowdown appears to be inevitable, but strong job and wage growth may result in a more gradual decline.

Equipment and software investment is expected to grow at a 2.2% pace in 2024.
- E&S investment expanded 3.2% (annualized) in Q4 % after shrinking 0.3% in Q3. Elevated interest rates will continue to drag on investment in 2024, and the climate for near-term investment is still relatively weak.
- Business investment expanded at a 3.7% annualized pace in Q4 driven by growth in non-residential structures investment, and accelerating from a weak 1.4% in Q3.

New business volume growth reported in ELFA’s Monthly Leasing and Finance Index was up 4.9% year to date in February, outpacing the rate of inflation. On a nominal basis, year-over-year growth in new business volume was positive in January and February.

Prepared by Keybridge Research and updated quarterly, the snapshot is available for free download at https://www.leasefoundation.org/industry-resources/industry-snapshot/

Media contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Eases in April

Washington, DC, April 18, 2024 – The Equipment Leasing & Finance Foundation (the Foundation) releases the April 2024 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 52.9, the second highest index in the last two years after last month’s index of 55.2.

When asked about the outlook for the future, MCI-EFI survey respondent Mark Bonanno, President and Chief Operating Officer, North Mill Equipment Finance, said, “Monetary policy has not been as effective in taming inflation that recently came in at an annual rate of 3.2%. The U.S. government as well as the consumer (via credit cards) have unsustainable debt levels, and that will eventually cause cracks in the economy.”

April 2024 Survey Results:
The overall MCI-EFI is 52.9, a decrease from the March index of 55.2.

When asked to assess their business conditions over the next four months, 10.7% of the executives responding said they believe business conditions will improve over the next four months, a decrease from 19.4% in March. 85.7% believe business conditions will remain the same over the next four months, up from 77.4% the previous month. 3.6% believe business conditions will worsen, relatively unchanged from 3.2% in March.
7.1% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.8% in March. 92.9% believe demand will “remain the same” during the same four-month time period, up from 71% the previous month. None believe demand will decline, a decrease from 3.2% in March.
14.3% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.1% in March. 71.4% of executives indicate they expect the “same” access to capital to fund business, down from 74.2% last month. 14.3% expect “less” access to capital, up from 9.7% the previous month.
When asked, 17.9% of the executives report they expect to hire more employees over the next four months, a decrease from 19.4% in 71.4% expect no change in headcount over the next four months, up from 67.7% last month. 10.7% expect to hire fewer employees, down from 12.9% in March.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 92.9% of the leadership evaluate the current U.S. economy as “fair,” down from 93.6% in March. 7.1% evaluate it as “poor,” up from 6.5% last month.
17.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, down from 25.8% in March. 71.4% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 54.8% last month. 10.7% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 19.4% the previous month.
In April, 17.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.6% the previous month. 78.6% believe there will be “no change” in business development spending, up from 64.5% in March. 3.6% believe there will be a decrease in spending, down from 12.9% last month.

April 2024 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“Our business is focused on agriculture and rural America. In many cases, ag producer profitability is down or expected to be down compared to the levels of recent years. This situation could make the cash flow and liquidity preservation benefits of a lease more attractive and valuable than they have been. The offset is that credit quality may be more of a challenge, but we expect it to remain quite manageable.” Jason Lueders, President, Farm Credit Leasing

Independent, Small Ticket
“The overspending by the Federal government is contributing greatly to driving up inflation.” James D. Jenks, CEO, Global Finance and Leasing Services, LLC

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org