16th Aug 2011
August 14, 2011
ELFA, the Equipment Leasing and Finance Association, reported an overall 3.9% increase in volume across the equipment financing market. This is a welcome shift after the past two years saw declines, a 2.2% drop in 2008 followed by a major 30.3% drop in 2009.
The 2011 Survey of Equipment Finance Activity (SEFA), which compiled information from 108 ELFA-member companies, shows growth across all market segments with the exception of the small-ticket segment ($50,000 and under). The survey also reported a decline in delinquencies and charge-offs.
The strongest growth was seen in the transportation, agriculture and medical industries while construction continued to struggle. The biggest organizational growth was found in companies that lease their own products (captive equipment financing) up 11.3%. Banks saw a slight decline of 0.09%.
While strong growth in the $521 billion equipment leasing and finance industry is a good sign for the recovering economy, not all companies are seeing relief. A 3.9% increase was seen in new business volume overall, although less than half of the survey participants saw any increase in volume in 2010.
To find out more about the survey results visit ELFA’s website.
Using non-bank financing, including leasing, to facilitate business growth is a trend that CFO Systems has seen repeatedly during the last couple of years. While banks have money to lend, it is not always the best financing alternative even for companies with strong credit. Companies with recent ‘hiccups’ in operations or results may find obtaining traditional bank financing a challenge.
Leasing is a viable alternative for many companies and often offers a more creative way to implement their plans. In addition, leasing can requires less out-of-pocket expenditure early in the process. Companies are doing themselves a favor by considering leasing during both stable and turbulent economic times.