Overall new business volume in July for the $628 billion equipment finance sector was $6.6 billion, up 15.8 percent from volume of $5.7 billion in the same period in 2011, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25). Volume was down 17.5 percent from the previous month. Year-to-date cumulative new business volume increased 14.7 percent.
“Despite well publicized fiscal challenges presented by the Eurozone debt crisis, a recent uptick in global oil prices, and a stubbornly sluggish U.S. economy, business financing of capital equipment continues to show some strength,” said ELFA President and CEO William G. Sutton, CAE. “Portfolio quality is steadily improving and the number of favorable business credit decisions remains relatively stable, at least throughout the summer’s early months.”
Receivables over 30 days were 2.2 percent, down from 2.4 percent in June, and down slightly when compared to the same period in 2011. Charge-offs decreased to 0.4 percent in July, down from 0.6 percent the previous month, and down by 43 percent compared to the same period last year.
Credit approvals decreased to 77.5 percent in July from 78.7 percent in June. Sixty-five percent of participating organizations reported submitting more transactions for approval during July, unchanged from the previous month.
Finally, total headcount for equipment finance companies decreased slightly from the previous month, and declined 2.8 percent year over year. Supplemental data show that again trucking and construction led the underperforming sectors, followed by small and medium-sized enterprises.
Separately, the Equipment Leasing & Finance Foundation's Monthly Confidence Index (MCI-EFI) for August is 50.2, down from the July index of 51.5, reflecting ongoing industry concerns over economic, regulatory and political uncertainty.
“As noted in July MLFI data, asset quality, hiring and origination volume trends reflect the ongoing sluggishness to the overall economy,” said Daniel P. Dyer, co-founder and chief executive officer, Marlin Business Services Corp. “Election year uncertainty coupled with burdensome regulations add to the unrest many companies are facing at this time.”