ELFA 2020 Survey of Equipment Finance Activity Reports New Business Volume Grew 10.5% in 2019
Posted: September 18, 2020 | Tradewinds
New business volume grew 10.5% in the equipment finance industry in 2019, according to the 2020 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA). The rise in new business volume marked the 10th consecutive year that businesses increased their spending on capital equipment. The 2020 SEFA covers key statistical, financial and operations information for the $900 billion equipment finance industry, based on a comprehensive survey of 100 ELFA member companies. While the report does not reveal the impact of the COVID-19 pandemic on the equipment finance industry—as it focuses on data from fiscal year 2019—it provides insight into multiple aspects of the industry, as well as the state of the industry preceding the pandemic.
Key findings for 2019 as reported in the 2020 SEFA include:
• New business volume grew 10.5% in 2019. The rise was stronger than the 4.4% increase achieved in 2018, and considerably stronger than the growth of the nation’s GDP, reported at 2.3% for 2019 by the U.S. Department of Commerce.
• By organization type, banks saw a 12.8% increase in new business volume, independents saw an 8.4% increase and captives saw a 6.9% increase. By market segment, new business volume grew 20.0% in the large ticket segment, 9.0% in middle ticket and 8.1% in small ticket.
• From an asset perspective, the top-five most-financed equipment types were transportation, IT and related technology services, construction, agricultural and industrial/manufacturing. The top five end-user industries representing the largest share of new business volume were services, agriculture, wholesale/retail, industrial and manufacturing, and transportation.
• Delinquencies edged up in 2019 to 2.1%, from 1.8% in 2018. Delinquencies have been on the rise since 2013 when only 1.2% of receivables were over 31 day past due.
• Charge-offs increased marginally overall to 0.3% of average receivables in 2019.
• Credit approvals remained steady year-over-year, as did the percentage of those approved applications being booked.
• Employment levels grew slightly by 1.2%.
ELFA also released a companion report to the 2020 SEFA called the 2020 Small-Ticket Survey of Equipment Finance Activity. The report, which focuses on small-ticket and micro-ticket equipment transactions among the SEFA respondents, found that new business volume in the small-ticket space grew by 5.8% in 2019.
PricewaterhouseCoopers LLP administered the 2020 SEFA. The results were compiled from surveys sent to 352 eligible ELFA member companies in the first quarter of 2020. A total of 100 companies submitted 2019 U.S. domestic lease and loan data.
“We are pleased to share the results of the 2020 Survey of Equipment Finance Activity,” said ELFA President and CEO Ralph Petta. “The world is a very different place today in the midst of the COVID-19 pandemic than it was in 2019. However, the 2019 statistics included in this report provide valuable industry benchmark data. The 2020 SEFA, the Interactive SEFA Dashboard and the personalized MySEFA data visualization tool are all designed to help users make more informed, data-driven decisions. We thank all the ELFA member respondents, without whom this leading industry data source would not be possible.”
The Equipment Leasing and Finance Association (ELFA) is the trade association that represents companies in the nearly $1 trillion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. ELFA members are the driving force behind the growth in the commercial equipment finance market and contribute to capital formation in the U.S. and abroad. Its 580 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. For more information, please visit www.elfaonline.org.