WASHINGTON, D.C. – Equipment leasing and finance companies expect business to improve in the coming months as demand expands for leases and loans to fund capital expenditures.
The Equipment Leasing & Finance Foundation released the August 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 48.4, an increase from the July index of 45.3.
The foundation also releases highlights of the covid-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry.
From 98 survey responses collected from August 3-14, results show that 89 percent of equipment finance companies have offered payment deferrals, including extensions, modifications or restructuring. Also, 76 percent of companies expect that the default rate will be greater in 2020 than in 2019, 19 percent expect it to be the same, and 5 percent expect it to be lower. A majority (81 percent) of companies have not furloughed or laid off employees.
Comments from survey respondents follow MCI-EFI survey comments below, and additional survey results are available at https://www.leasefoundation.org/industry-resources/covid-impact-survey/.
When asked about the outlook for the future, MCI-EFI survey respondent Brian Madison, president, TrinityRail Leasing & Management Services, said, “To date, receivables have held up surprisingly well, which seems to indicate businesses were relatively healthy entering the crisis. The biggest concern is continued limited demand given the amount of uncertainty related to the spread of Covid-19.”
When asked to assess their business conditions over the next four months, 24.1 percent of executives responding said they believe business conditions will improve over the next four months, up from 21.4 percent in July. 51.7 percent believe business conditions will remain the same over the next four months, an increase from 50 percent the previous month. 24.1 percent believe business conditions will worsen, a decrease from 28.6 percent in July.
In addition, 13.8 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 14.3 percent in July. 65.5 percent believe demand will “remain the same” during the same four-month time period, an increase from 64.3 percent the previous month. 20.7v percent believe demand will decline, a decrease from 21.4 percent in July.
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