February Equipment Financing Business Down 6 Percent Year-over-year

Small business owners may be putting off purchases until they have better tax and regulatory certainty.

Overall new business volume in February for 25 companies representing a cross section of the $725 billion equipment finance sector was $4.7 billion, down 6 percent from volume of $5 billion in February 2012, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25). Month-over-month, new business volume was down 20 percent from January. Year to date, cumulative new business volume was up five percent compared to 2012.

“It is too early to tell whether February’s decline in new business volume signals a longer-term trend spurred by economic uncertainty, sequestration and unresolved fiscal matters, or is a one-time development that needs to be closely monitored,” said ELFA President and CEO William G. Sutton, CAE. “Recent internal and external economic indicators and analyses point to a moderately sluggish beginning to the year, to be followed by a pick-up in overall economic activity in the second half of the year. February’s somewhat disappointing data could very well provide concrete evidence of this forecast.”

Receivables over 30 days increased to 2 percent in February, up from 1.8 percent in January.  They were down from 2.5 percent in the same period in 2012. Charge-offs were up slightly at 0.4 percent from their all-time low of 0.3 percent the previous month.

Credit approvals totaled 77.4 percent in February, down 1 percent from January.  Fifty-three percent of participating organizations reported submitting more transactions for approval during February, down from 55 percent the previous month.

Finally, total headcount for equipment finance companieswas down 3.5 percent from the previous month, and decreased 2.9 percent year over year, largely due to a change in reporting by one survey participant.

“The government’s inability to manage the finances of the country appears to be affecting the current recovery,” said Hugh Connelly, president, Univest Capital, Inc. “Small business owners want to know the tax and regulatory rules within which they must operate.  Until the government determines the attributes of the economic landscape, volatility will continue to unsettle the economy, and a lasting recovery will remain elusive.”

 

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