Equipment finance confidence rises to 2-year high in February
Confidence in the equipment finance market jumped almost five points to 64.4 in February thanks to high demand due to the COVID-19 pandemic.
The Equipment Leasing & Finance Foundation released the February 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today, which showed overall confidence in the equipment finance market is 64.4, an increase from the January index of 59.6. This is a 2-year high for the index and is almost triple what it was nine months ago when the COVID-19 pandemic broke out.
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% also believe business conditions will remain the same over the next four months, which is a sharp decrease from 59.3% in January. Less than ten percent believe business conditions will get worse.
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.
Just under a quarter of the respondents (23.1%) 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.
Half of the survey respondents believe 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.
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