Leasing and finance index up double-digits in 2021
August new business volume up 21% year-over-year, down 14% month-to-month, and up 10% year-to-date
The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector, showed their overall new business volume for August was $8.5 billion, up 21% year-over-year from new business volume in August 2020. Volume was down 14% month-to-month from $9.9 billion in July. Year-to-date, cumulative new business volume was up 10% compared to 2020.
Receivables over 30 days were 1.8%, down from 1.9% the previous month and down from 2.4% in the same period in 2020. Charge-offs were 0.23%, up from 0.18% the previous month and down from 0.75% in the year-earlier period.
Credit approvals totaled 76.3%, down from 76.5% in July. Total headcount for equipment finance companies was down 14.1% year-over-year, a decrease due to significant downsizing at an MLFI reporting company.
Separately, the Equipment Leasing and Finance Foundation’s Monthly Confidence Index (MCI-EFI) in September is 60.5, a decrease from the August index of 66.6.
ELFA President and CEO Ralph Petta said, “August data show some softness in equipment demand resulting from a mix of summer doldrums, continued supply chain disruptions and lingering pandemic-related woes. Business optimism, which peaked earlier in the summer, also has waned somewhat. However, when compared to where the economy and equipment finance business were a year ago, with the COVID-19 virus raging throughout the country, August new business volume is wholly acceptable.”
Jeffrey Hilzinger, President and CEO, Marlin Capital Solutions, said, “2021, while much better than 2020, continues to be a challenging period for the equipment finance industry. While demand for equipment remains strong, August was the second consecutive month of reduced origination volume for the industry. Supply chain issues continue to be a key driver underlying this trend and seem to have worsened in recent months. On the positive side, approval rates have remained at pre-COVID levels and portfolio delinquencies and charge-offs remain at historically low levels.”