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Foundation COVID-19 Impact and Economic Recovery Survey Reveals Equipment Finance Companies’ Work-From-Home Expectations, Portfolio Performance

Washington, DC, May 27, 2021 – The Equipment Leasing & Finance Foundation (Foundation) releases the results of its first quarterly COVID-19 Impact and Recovery Survey today revealing equipment finance companies’ work from home practices and performance of portfolio metrics, including deferrals, defaults, and originations. The COVID-19 Impact and Recovery Survey is revised and expanded from the Foundation’s COVID-19 Impact Survey of the Equipment Finance Industry launched in May 2020, in order to reflect longer-term effects of the pandemic’s impact on equipment finance companies going forward.

Among the survey highlights:
Work from Home (WFH):
• The level of WFH pre-pandemic overall was 28%. The larger the lender (by annual origination volume) the fewer that were 50%+ WFH before the pandemic.
• About 85% of all lender sizes were mostly WFH at the beginning of 2021.
• By 2022, management expect WFH to be cut in half, with the portion of lenders having 50%+ WFH going from 84% currently down to 41%.
o 40% of $1B+ organizations are expecting to be mostly WFH next year, compared to only 7% pre-pandemic.
o 60% of captives expect to be mostly WFH in 2022. None were 50+% WFH before the pandemic.
Deferrals:
• Deferral rates are down 90% from their peak in 2020.
• No lenders report more than 10% of their portfolios are in deferral currently.
• The vast majority of borrowers that had deferrals (93.6%) are now paying as agreed.
Defaults:
• Default rates in 2020 (0.92%) were up from 2019 (0.73%), but not by much.
• 2021 default rates (0.52%) are expected to be lower than those in 2019; the average of 2020 and 2021 equals the rate of 2019.
Originations:
• Survey respondents reported only a 1% decline overall in originations in 2020.
• 45% reported increased volume in 2020. Lenders originating less than $1B reported 34% growth in 2021.
• Expectations for 2021 are for significant growth, 18% overall.

“The COVID-19 Impact and Recovery Survey is the kind of timely in-depth, forward-looking research the Foundation is committed to bringing to the industry,” said Tom Ware, Foundation Trustee and Research Committee Chair. “These survey results show the strength and resilience of the equipment finance industry overall in coming through the pandemic, and the ways in which our workforce will continue to be impacted long after.”

COVID-19 Impact and Recovery Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Short term we are still seeing the impacts from PPP. Medium term we expect some winners and losers along asset classes, and long term we are optimistic about the business community and investment in assets.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Small Ticket
“We see an uptick in the short term as vaccinations are rolled out. Hopefully, we can reach herd immunity in the second half of the year and approach a level of activity consistent with the pre-pandemic economy.” Steve Grant, CFO, Americorp Financial, LLC

Independent, Middle Ticket
“The equipment finance industry generally will continue to grow along with the economy in the short, medium, and long term. However, with the Biden Administration’s emphasis on infrastructure, it is likely that we will see an increase beyond the general economy.” Jonathan Ruga, CEO, Sentry Financial Corporation

Survey responses were collected from 64 equipment finance company executives from April 1-28, 2021. Results are available online at https://www.leasefoundation.org/industry-resources/covid-impact-recovery-survey/. All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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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 programs that contribute to industry innovation, individual careers, and the overall betterment 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

Equipment Finance Industry Confidence Remains Near Historic Highs

Washington, DC, May 20, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the May 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 72.1, easing from April’s all-time high of 76.1.

When asked about the outlook for the future, MCI-EFI survey respondent Bruce J. Winter, President, FSG Capital, Inc., said, “While vaccine ‘herd immunity’ may be unachievable, warmer weather, immunity provided by previous infections and over 105 million Americans fully vaccinated will allow most economic activity to resume at pre-pandemic levels this summer. Business owners are much more optimistic and stimulus supported capital spending will likely reach unprecedented levels in the next 12 months. Prolonged inflation risk is a real concern as this untested experiment in rapidly expanding government debt will reach new highs.”

May 2021 Survey Results:

The overall MCI-EFI is 72.1, a decrease from the April index of 76.1.

When asked to assess their business conditions over the next four months, 53.6% of executives responding said they believe business conditions will improve over the next four months, down from 73.3% in April. 46.4% believe business conditions will remain the same over the next four months, up from 23.3% the previous month. None believe business conditions will worsen, down from 3.3% in April.
53.6% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 70% in April. 46.4% believe demand will “remain the same” during the same four-month time period, an increase from 30% the previous month. None believe demand will decline, unchanged from April.
32.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 43.3% in April. 67.9% of executives indicate they expect the “same” access to capital to fund business, an increase from 56.7% last month. None expect “less” access to capital, unchanged from the previous month.
When asked, 39.3% of the executives report they expect to hire more employees over the next four months, down from 43.3% in April. 60.7% expect no change in headcount over the next four months, an increase from 56.7% last month. None expect to hire fewer employees, unchanged from April.
10.7% of the leadership evaluate the current U.S. economy as “excellent,” a decrease from 13.3% the previous month. 89.3% of the leadership evaluate the current U.S. economy as “fair,” up from 80% in April. None evaluate it as “poor,” down from 6.7% last month.
60.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 73.3% in April. 39.3% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 23.3% last month. None believe economic conditions in the U.S. will worsen over the next six months, down from 3.3% the previous month.
In May 53.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 46.7% last month. 42.9% believe there will be “no change” in business development spending, a decrease from 53.3% in April. 3.6% believe there will be a decrease in spending, up from none last month.

May 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“We are seeing demand increase for capital expenditures, especially large facility expansions. Material and labor cost increases are requiring customers to sharpen the pencil to ensure investments remain prudent.” Michael Romanowski, President, Farm Credit Leasing

Independent, Large Ticket
“Near-term the high level of liquidity generally available will continue to drive investor demand in our primary sectors. A major concern over the short to intermediate term is the potential inflationary impact associated with that along with corresponding market pressures which may adversely impact interest rates.” Glenn Davis, President and CEO, RESIDCO

ABOUT THE MCI

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

How may I access the MCI-EFI?
Survey results are posted on the Foundation website, https://www.leasefoundation.org/industry-resources/monthly-confidence-index/, included in the Foundation Forecast eNewsletter, and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

New Foundation Report Examines Cyber Risk and Security in the Equipment Finance Industry

Washington, DC, May 10, 2020 – Most equipment leasing and finance companies have some form of cybersecurity defenses in place, but are still vulnerable to cyberattack due to the rapidly advancing tactics and techniques used by modern attackers, according to a new study, Cyber Risk and Security in the Leasing and Finance Industry, released by the Equipment Leasing & Finance Foundation (Foundation). The report provides analyses of current and future industry threats, cyber defenses, regulations and trends in compliance, practical advice for securing any size organization, and much more in this comprehensive examination of the vast subject of cybersecurity.

Among the wide range of issues in the study are:
•   Industry adoption – The dizzying pace of technology adoption that is one of the most significant drivers of competitive advantage and gains in operational efficiency has left equipment finance companies at increased risk for cyberattack.
•   Threats – Well-funded criminal organizations and nation-states now have access to tools and capabilities that can penetrate even the best defended organizations. Ransomware attacks increased 98.1% in the United States through Q3 2020, and there is a new victim of ransomware every 10 seconds worldwide.
•   Compliance – The compliance landscape for equipment finance companies has never been so complex. All 50 states including the District of Columbia, have enacted data breach notification legislation.
•   Response – Successfully managing organizational cyber risk requires constant vigilance to understand the environment’s threats and adopt an agile risk management methodology while balancing compliance requirements. This is an impossible task for the security team alone and requires a total organizational commitment to information security goals and practices.

“As the equipment finance industry continues its rapid adoption of technology and digitalization, cyber risk and cybersecurity are critical concerns,” said Tom Ware, Foundation Research Committee Chair. “This thorough study provides valuable insights and actionable steps for equipment finance professionals to use in securing their organizations.”

Download the full report at http://bit.ly/ELFFcybersecurity. All Foundation studies are available for free download from the Foundation’s online library at http://store.leasefoundation.org/.

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Media contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence at All-Time High in April

Washington, DC, April 22, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the April 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 76.1, an all-time high and an increase from the March index of 67.7.

When asked about the outlook for the future, MCI-EFI survey respondent Aylin Cankardes, President, Rockwell Financial Group, said, “We are starting to see pent-up demand for goods and services leading to expanded capital budgets for equipment to produce it and transportation to deliver it. With favorable interest rates, businesses are increasing spending again to stay responsive in a rapidly evolving environment.”

April 2021 Survey Results:
The overall MCI-EFI is 76.1, an increase from the March index of 67.7.

When asked to assess their business conditions over the next four months, 73.3% of executives responding said they believe business conditions will improve over the next four months, up from 50% in March. 23.3% believe business conditions will remain the same over the next four months, down from 46.4% the previous month. 3.3% believe business conditions will worsen, unchanged from March.
70% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 42.9% in March. 30% believe demand will “remain the same” during the same four-month time period, a decrease from 53.6% the previous month. None believe demand will decline, down from 3.6% in March.
43.3% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 28.6% in March. 56.7% of executives indicate they expect the “same” access to capital to fund business, a decrease from 71.4% last month. None expect “less” access to capital, unchanged from the previous month.
When asked, 43.3% of the executives report they expect to hire more employees over the next four months, up from 42.9% in March. 56.7% expect no change in headcount over the next four months, a decrease from 57.1% last month. None expect to hire fewer employees, unchanged from March.
13.3% of the leadership evaluate the current U.S. economy as “excellent,” an increase from 3.6% the previous month. 80% of the leadership evaluate the current U.S. economy as “fair,” up from 78.6% in March. 6.7% evaluate it as “poor,” down from 17.9% last month.
73.3% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 60.7% in March. 23.3% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 32.1% last month. 3.3% believe economic conditions in the U.S. will worsen over the next six months, down from 7.1% the previous month.
In April 46.7% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 39.3% last month. 53.3% believe there will be “no change” in business development spending, a decrease from 60.7% in March. None believe there will be a decrease in spending, unchanged from last month.

April 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“As vaccination levels continue to increase and confidence to re-enter social environments rises, increased spending will result. This progression to a widening economy should serve to strengthen demand for commercial assets and the financing of those assets. We are optimistic that business will recover, and yet are focused on managing the risk of those that are still highly impacted and will take additional time to find their footing.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“We continue to see good demand for capital expenditures from the markets we serve. We have noticed tighter spreads as competition becomes more active.” Michael Romanowski, President, Farm Credit Leasing

Independent, Large Ticket
“Early concerns are the new Biden tax plan and proposed changes to bonus depreciation. Optimistically, given the rebound in the economy short-term demand for equipment finance should benefit.” Vincent Belcastro, Group Head Syndications, Element Fleet Management

ABOUT THE MCI
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.

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
S. economic conditions over the next six months
Business development spending expectations
Open-ended question for comment

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Q2 2021 Equipment Leasing & Finance Industry Snapshot now available

The Equipment Leasing & Finance Foundation has released the Q2 2021 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 range of details in the new release:
• The U.S. economy expanded at a 4.3% annualized pace in Q4 2020, but was still 2.4% below its level at the end of 2019. Growth in Q4 was driven by robust business investment, residential investment, and consumer spending.

• Overall, the Foundation projects the U.S. economy will grow by 5.7% in 2021.

• Economic tailwinds for growth this year include:
o Historic stimulus, record-high savings rates, and below-trend spending, which should provide a substantial lift to consumer spending as the economy reopens this summer.
o The housing sector, which is benefitting from stable demand drivers like remote work and increased Millennial homeownership.

• Economic headwinds include:
o Uneven global recovery if major trading partners like Europe struggle with vaccination efforts, which will result in weak demand for U.S. exports and drag on markets such as oil & gas and industrial equipment.
o A weak U.S. labor market despite regaining almost half of jobs lost during the pandemic.

• Additional factors to watch include:
o Vaccine rollout and new strains of COVID.
o Inflationary pressures
o Infrastructure spending bill

• Equipment investment will likely accelerate in 2021 with improving vaccination rates and the need to invest for the new post-COVID normal. Equipment and software investment is projected to expand by a robust 11.2% in 2021.

• New business volume growth reported in ELFA’s Monthly Leasing and Finance Index rebounded at a strong 9% yearly pace in February, the first YOY improvement since the beginning of the pandemic.

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

Q2 Update to 2021 Economic Outlook Forecasts 11.2% Expansion in Equipment and Software Investment Growth and 5.7% GDP Growth as Pandemic Wanes

Washington, DC, April 14, 2021 – With U.S. vaccination rates rising quickly and the end of the pandemic in sight, equipment and software investment growth is expected to be robust this year as businesses invest to adapt to a post-pandemic normal. Annual equipment and software investment growth of 11.2 percent is forecast for 2021. Annual U.S. GDP growth for 2021 is forecast at 5.7 percent, according to the Q2 update to the 2021 Equipment Leasing & Finance U.S. Economic Outlook released today by the Equipment Leasing & Finance Foundation.

Scott Thacker, Foundation Chair and Chief Executive Officer of Ivory Consulting Corporation, said, “Finally, we are beginning to see the light at the end of the tunnel. The widespread availability of vaccinations offers hope that economic activity will soon return to pre-pandemic levels, or beyond. The robust stimulus efforts, along with trillions of dollars in pent-up demand, point to a wave of spending this summer and fall. All indicators point to 2021 being a banner year for equipment and software investment, and the equipment finance industry is poised to benefit from that expected economic activity.”

Highlights from the Q2 update to the 2021 Outlook include:

The equipment and software investment growth forecast of 11.2 percent benefited from a 21 percent surge in Q4 2020, which provided a strong jumping-off point for 2021.
The U.S. economy expanded at 4.3 percent (revised) annualized rate in Q4 2020 as the nation struggled with surging COVID-19 cases and deaths. Although the labor market recovery is still far from complete and the K-shaped recovery has left millions of consumers in a precarious position, the overall balance of risks is on the upside.
The U.S. manufacturing sector continued to improve in early 2021 due to strong demand for both consumer and business goods. Underlying demand remains strong, although supply chain backlogs should be monitored and rising input prices could become an increasingly significant concern in the months ahead.
Main Street managed to weather the winter months and the third wave of the pandemic, although not without significant difficulty. Further federal relief and stimulus efforts have played an outsized role in the survival and longer-term viability of many businesses. Warmer weather, rising vaccination rates, and the relaxation of pandemic-era operating restrictions offer hope that there are better days ahead.
The Federal Reserve again confirmed its commitment to keeping interest rates at zero until at least 2023. The Fed also ended a pandemic-era capital requirement relief measure that could cause turmoil in bond markets.
Headwinds to keep an eye on include the potential for higher inflation, the ongoing labor market recovery, and the emergence of new virus strains that could reduce the effectiveness of existing vaccines.

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which is released in conjunction with the Economic Outlook, tracks 12 equipment and software investment verticals. In addition, the Momentum Monitor Sector Matrix provides a customized data visualization of current values of each of the 12 verticals based on recent momentum and historical strength. Nine verticals are showing signs of accelerating investment after the pandemic-fueled collapse, and three other verticals are showing signs of peaking, although investment growth should remain healthy in the near term. Over the next three to six months, year over year:

Agriculture machinery investment growth should remain robust.
Construction machinery investment growth could return to positive territory, though recent movement suggests that upside potential is limited.
Materials handling equipment investment growth should remain in positive territory.
All other industrial equipment investment growth should return to positive territory.
Medical equipment investment growth should be strong.
Mining and oilfield machinery investment growth appears to have bottomed out and should improve despite this month’s decline.
Aircraft investment growth should continue to improve.
Ships and boats investment growth should be modest.
Railroad equipment investment growth should return to positive territory.
Trucks investment growth should return to positive territory.
Computers investment growth should remain strong.
Software investment growth should accelerate.

The full report of the Momentum Monitor is now available at https://www.leasefoundation.org/industry-resources/momentum-monitor/.

The Foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economic and public policy consulting firm Keybridge Research. The annual economic forecast provides the U.S. macroeconomic outlook, credit market conditions, and key economic indicators. The Q2 report is the first update to the 2021 Economic Outlook and will be followed by two more quarterly updates before the publication of the 2022 Economic Outlook in December.

Download the full report at https://www.leasefoundation.org/industry-resources/u-s-economic-outlook/.

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

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 programs that contribute to industry innovation, individual careers, and the overall betterment of the equipment leasing and finance industry. The Foundation is funded through individual and corporate donations. Learn more at www.leasefoundation.org.

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Media Contact: Kelli Nienaber, 202-238-3429, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Reaches Highest Level in Three Years

Washington, DC, March 18, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the March 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 67.7, an increase from the February index of 64.4, and the highest level since April 2018.

When asked about the outlook for the future, MCI-EFI survey respondent David Drury, Senior Vice President and Head of Equipment Finance, Fifth Third Bank, said, “We are relatively positive on domestic and global economic activity for this year, and likely next. Despite lingering disruptions, with the tailwinds of government stimulus, central bank liquidity, excess capacity, and pent-up demand, global economic growth may positively surprise in 2021. The big question that could change our mind would be a return of inflation, which would change the dovish nature of most global central banks. Higher inflation would lead to higher interest rates and less of an incentive for businesses to borrow and invest.”

March 2021 Survey Results:

The overall MCI-EFI is 67.7, an increase from the February index of 64.4.

When asked to assess their business conditions over the next four months, 50% of executives responding said they believe business conditions will improve over the next four months, up from 46.2% in February. 46.4% believe business conditions will remain the same over the next four months, unchanged from the previous month. 3.6% believe business conditions will worsen, a decrease from 7.7% in February.
42.9% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, 53.6% believe demand will “remain the same” during the same four-month time period, and 3.6% believe demand will decline, all relatively unchanged from February.
28.6% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 23.1% in February. 71.4% of executives indicate they expect the “same” access to capital to fund business, a decrease from 76.9% last month. None expect “less” access to capital, unchanged from the previous month.
When asked, 42.9% of the executives report they expect to hire more employees over the next four months, up from 38.5% in February. 57.1% expect no change in headcount over the next four months, a decrease from 61.5% last month. None expect to hire fewer employees, unchanged from February.
3.6% of the leadership evaluate the current U.S. economy as “excellent,” an increase from none the previous month. 78.6% of the leadership evaluate the current U.S. economy as “fair,” up from 76.9% in February. 17.9% evaluate it as “poor,” down from 23.1% last month.
60.7% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 50% in February. 32.1% indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 38.5% last month. 7.1% believe economic conditions in the U.S. will worsen over the next six months, down from 11.5% the previous month.
In March 39.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, up from 30.8% last month. 60.7% believe there will be “no change” in business development spending, a decrease from 69.2% in February. None believe there will be a decrease in spending, unchanged from last month.

March 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Middle Ticket
“The prospect of a broadly-vaccinated population should further push open state and local economies.” Adam Warner, President, Key Equipment Finance

Independent, Middle Ticket
“The vaccine rollout is now progressing quickly, and while some predict we won’t see the end of this pandemic until year end, I believe everyone that wants a vaccine will be able to receive one by early May. This bodes well for the return of strong economic activity that will almost certainly boost capital spending significantly.” Bruce J. Winter, President, FSG Capital, Inc.

Independent, Large Ticket
“As COVID restrictions lift and companies have a clearer vision of future demand, it will help companies make more informed capex decisions.” Vincent Belcastro, Group Head Syndications, Element Fleet Management

The COVID-19 Impact Survey of the Equipment Finance Industry will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.

ABOUT THE MCI

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
S. economic conditions over the next six months
Business development spending expectations
Open-ended question for comment

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Foundation Recommends Studies and Articles for Current Business Environment

The Equipment Leasing & Finance Foundation’s future focus identifies trends, challenges, and opportunities in the equipment finance industry. Foundation studies are produced with a long-lens view into the future, so many of the insights are as relevant now as when they were first released. Here are our recommendations of Foundation reports and articles that are worth taking another look at in today’s equipment finance environment.

Going Digital: Current Activities and Future Expectations –This study provides key insights, including digital tools being used currently, digital initiatives to expect in the next few years, constraints to adopting digital solutions, and strategies for creating a digital culture.
Headwinds, Undercurrents, and Tailwinds: How Equipment Finance Companies Can Learn and Benefit from the Fintech Phenomenon – In this study the Foundation reveals that rapidly emerging Fintech technology platforms present a disruptive force to the equipment finance industry, but Fintech is not forecast to become a competitor as a major source of equipment funding.
The Impact of New Energy Production – Disruption in the energy sector presents significant opportunities for investors, financiers, equipment vendors and solution providers. This in-depth study, commissioned by the Foundation and prepared by Navigant Research, forecasts across-the-board growth in energy sectors related to a shift in emphasis from centralized fossil power generation to renewable energy.
2018 Industry Future Council Report on the changing workforce and the 2019 IFC report on turning innovation into strategic planning. These reports will assist equipment leasing and finance firms as they implement changes to adapt for future growth.
Robots, Cobots, and Finance – Increased robotics utilization among manufacturers and end-users will generate greater financing opportunities as robotics continue to change how business is conducted in the future. The study features a wide-ranging examination of the challenges and growth potential of robots and cobots, and the financing risks for credit, residuals, legal, regulations, and accounting.
The State of Credit Quality: Where We Have Been and Where We Are Going – Published in 2017, this study investigates key early signs of cyclical macro-economic weakness and if changes made to underwriting standards and portfolio management after the last recession will have a quantitative impact on portfolio performance during the next downturn.
On the Rise: How Inflationary Pressures and Rising Interest Rates Could Impact the Equipment Finance Industry – This report explains how a world of rising inflation and interest rates may affect the equipment finance industry, including customer demand, portfolio performance, spreads, and the propensity to finance.
Digital Documents – This study quantifies and refines the extent to which the equipment leasing industry is now engaged in Electronic Lease Transactions, and the challenges that have been addressed in the process. The study also seeks to understand those obstacles, both actual and perceived, that are slowing the path to expanded use of Electronic Lease Transactions. Finally, it offers concrete advice on how the industry may address those challenges and accelerate adoption of Electronic Lease Transactions.

Vertical Market Outlook Series:

Vertical Market Outlook Series: Healthcare – This study provides an outlook on the healthcare sector in the U.S., demographic and spending trends, and key developments and trends impacting this sector.al
Vertical Market Outlook Series Agricultural Equipment – This study of vertical equipment markets provides an outlook on the agriculture equipment sector in the US, demographic and spending trends, and key developments and trends impacting this sector over the next one to two years.
Vertical Market Outlook Series Road Transportation – This report provides an outlook on U.S. road transportation sector, sector confidence and anticipated spending, and key developments and trends.
Vertical Market Outlook Series Construction – This report provides an outlook on U.S. residential and commercial construction, sector confidence and anticipated spending, and key developments and trends impacting this sector over the next 1-2 years.

Journal of Equipment Lease Financing articles

The Business Guide to Improving Information Security– The continuing increase in large-scale cybersecurity breaches has businesses searching for solutions to reduce their risk. Despite an explosion of new information security products and services, no single tool can reduce risk. Equipment financing companies must build a formal information security framework, complete with policies and procedures.
Special Consideration for Perfection Opinions Covering Electronic Chattel Paper as Collateral- The equipment leasing industry is expanding its use of electronic records and signatures to document equipment leases. As the use of electronic lease documentation grows, so does the desire of equipment lessors to offer those leases to lenders as collateral on the same footing with paper-based leases.

All Foundation studies and articles are available for free download at our online Research Library.

Equipment Finance Industry Confidence Higher in February

Washington, DC, February 18, 2021 – The Equipment Leasing & Finance Foundation (the Foundation) releases the February 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 64.4, an increase from the January index of 59.6.

When asked about the outlook for the future, MCI-EFI survey respondent Brad Peterson, CEO, Channel Partners Capital, said, “Although we believe the 2021 PPP program will suppress capital needs for a short period of time among SMBs, we’re expecting a positive rebound from a year’s worth of pent-up pandemic demand. Our post-pandemic portfolio looks fantastic and we expect the strong performance to continue through 2022. We believe this is the time to invest in SMB marketplace opportunities.”

February 2021 Survey Results:
The overall MCI-EFI is 64.4, an increase from the January index of 59.6.

When asked to assess their business conditions over the next four months, 46.2% of executives responding said they believe business conditions will improve over the next four months, up from 33.3% in January. 46.2% believe business conditions will remain the same over the next four months, a decrease from 59.3% the previous month. 7.7% believe business conditions will worsen, a slight increase from 7.4% in January.
42.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 33.3% in January. 53.9% believe demand will “remain the same” during the same four-month time period, a decrease from 59.3% the previous month. 3.9% believe demand will decline, down from 7.4% in January.
23.1% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 18.5% in January. 76.9% of executives indicate they expect the “same” access to capital to fund business, a decrease from 81.5% last month. None expect “less” access to capital, unchanged from the previous month.
When asked, 38.5% of the executives report they expect to hire more employees over the next four months, up from 25.9% in January. 61.5% expect no change in headcount over the next four months, a decrease from 66.7% last month. None expect to hire fewer employees, down from 7.4% in January.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 76.9% of the leadership evaluate the current U.S. economy as “fair,” down from 77.8% in January. 23.1% evaluate it as “poor,” up from 22.2% last month.
50% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 51.9% in January. 38.5% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 37% last month. 11.5% believe economic conditions in the U.S. will worsen over the next six months, up slightly from 11.1% the previous month.
In February 30.8% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 22.2% last month. 69.2% believe there will be “no change” in business development spending, a decrease from 74.1% in January. None believe there will be a decrease in spending, down from 3.7% last month.

February 2021 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Wintrust Specialty Finance had a solid year of growth in spite of the global pandemic. 2021 has started out well with strong application flow, approval rates and funding volume. Additionally, the portfolio has performed with low delinquency and credit quality. I expect that mid-year will bring challenges as PPP funds fade. However, we are focused in industries that are performing with essential use collateral that we believe will continue to perform.” David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Bank, Middle Ticket
“We are seeing pent-up demand for equipment and structure investment. Due to the continued uncertainty caused by COVID and the low interest rate environment, customers are preferring to finance rather than pay cash.” Michael Romanowski, President, Farm Credit Leasing

Independent, Large Ticket
“The equipment finance and leasing marketplace has always been resilient and performs well in market dislocation. I have concerns around the unknown impact of numerous executive orders, as well as COVID-19.” Dave Fate, President and CEO, Stonebriar Commercial Finance

The COVID-19 Impact Survey of the Equipment Finance Industry, conducted monthly since its launch in May 2020 and released with the MCI-EFI, will be reported on a quarterly basis in 2021. Additionally, questions will be revised to reflect longer term effects of the pandemic’s impact on equipment finance companies going forward. If you wish to participate on behalf of your company in 2021, please contact Stephanie Fisher at sfisher@leasefoundation.org to determine eligibility for inclusion in the survey.

ABOUT THE MCI

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
S. economic conditions over the next six months
Business development spending expectations
Open-ended question for comment

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Media Contact: Kelli Nienaber, knienaber@leasefoundation.org

Equipment Finance Industry Confidence Remains Steady in January at Pre-Pandemic Levels

Washington, DC, January 21, 2020 – The Equipment Leasing & Finance Foundation (the Foundation) releases the January 2021 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 $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 59.6, unchanged from the December index and in line with pre-pandemic levels.

When asked about the outlook for the future, MCI-EFI survey respondent Michael Romanowski, President, Farm Credit Leasing, said, “As we enter a new year and a new administration, eyes will be on fiscal policy to get us through the final stretches of the pandemic. We expect business investment to increase once the path forward is clearer.”

January 2021 Survey Results:
The overall MCI-EFI is 59.6, unchanged from the December index.

• When asked to assess their business conditions over the next four months, 33.3% of executives responding said they believe business conditions will improve over the next four months, up from 27.6% in December. 59.3% believe business conditions will remain the same over the next four months, a decrease from 62.1% the previous month. 7.4% believe business conditions will worsen, a decrease from 10.3% in December.

• 33.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 27.6% in December. 59.3% believe demand will “remain the same” during the same four-month time period, an increase from 55.2% the previous month. 7.4% believe demand will decline, down from 17.2% in December.

• 18.5% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 24.1% in December. 81.5% of executives indicate they expect the “same” access to capital to fund business, an increase from 75.9% last month. None expect “less” access to capital, unchanged from the previous month.

• When asked, 25.9% of the executives report they expect to hire more employees over the next four months, down from 31% in December. 66.7% expect no change in headcount over the next four months, a decrease from 69% last month. 7.4% expect to hire fewer employees, up from none in December.

• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. 77.8% of the leadership evaluate the current U.S. economy as “fair,” up from 72.4% in December. 22.2% evaluate it as “poor,” down from 27.6% last month.

• 51.9% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 55.2% in December. 37% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 34.5% last month. 11.1% believe economic conditions in the U.S. will worsen over the next six months, up from 10.3% the previous month.

• In January 22.2% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 34.5% last month. 74.1% believe there will be “no change” in business development spending, an increase from 62.1% in December. 3.7% believe there will be a decrease in spending, up slightly from 3.5% last month.

ABOUT THE MCI

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

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Media contact: Kelli Nienaber, knienaber@leasefoundation.org