New business volume grew 6.9 percent in the equipment finance industry in 2017, according to the 2018 Survey of Equipment Finance Activity (SEFA) released recently by the Equipment Leasing and Finance Association (ELFA).
The rise in new business volume marked the eighth consecutive year that businesses increased their spending on capital equipment. The SEFA report covers key statistical, financial and operations information for the $1 trillion equipment finance industry, based on a comprehensive survey of 114 ELFA member companies. The report is available at www.elfaonline.org/SEFA.
ELFA also released a companion report to the 2018 SEFA called the 2018 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 3.6 percent in 2017.
“The equipment finance industry continues to grow and prosper, as evidenced by this latest edition of ELFA’s Survey of Equipment Finance Activity. The association board and staff are grateful to ELFA member respondents, without whom this leading industry data source would not be possible,” said ELFA President and CEO Ralph Petta.
Key findings for 2017 as reported in the 2018 SEFA include:
- As an end-user of equipment finance, the agriculture industry represented 12 percent of new business volume reported by ELFA member companies, unchanged from 2016.
- The agriculture industry ranked first in the percentage of new business volume reported by ELFA member companies, followed by wholesale/retail, services - other, and construction.
- Agricultural equipment represented 8.7% of equipment financing new business volume reported by ELFA member companies, down from 9.8% in 2016.
- Agricultural equipment ranked third in the percentage of new business volume reported by ELFA member companies, after construction equipment and trucks/trailers.
- New business volume grew 6.9 percent in 2017, surpassing real GDP, which grew 2.3 percent. By organization type, captives and independents saw a 10 percent increase in new business volume, while banks saw a 5 percent increase. By market segment, new business volume grew 9.7 percent in the middle ticket segment, 4.3 percent in small ticket and 2.8 percent in large ticket.
- From an asset perspective, the top-five most-financed equipment types were IT and related technology services, transportation, construction, agricultural and office machines.
- 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 increased slightly, with 2.0 percent of receivables over 31 days past due compared to 1.8 percent the previous year. While delinquencies are still very low, they have been on the rise since 2013 when only 1.2 percent of receivables were over 31 days past due.
- Charge-offs also increased slightly but remained at 0.33 percent of average receivables; any level lower than 1 percent is considered very low.
- Credit approvals decreased slightly while the percentage of approved applications being booked and funded increased.
- Employment levels grew moderately by 3.4 percent.
PricewaterhouseCoopers LLP administered the 2018 SEFA. The results were compiled from surveys sent to 375 eligible ELFA member companies in the first quarter of 2018. A total of 114 companies submitted 2017 U.S. domestic lease and loan data.