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Equipment Leasing and Finance Industry Confidence Higher in September

The Equipment Leasing & Finance Foundation’s September 2020 Monthly Confidence Index for the Equipment Finance Industry, released Sept. 17, 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 56.5, an increase from the August index of 48.4.

    

The Foundation also released 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 75 survey responses collected from Sept. 1–13, results show that 91% of equipment finance companies have offered payment deferrals, including extensions, modifications or restructuring. Seventy-three percent of companies expect that the default rate will be greater in 2020 than in 2019, down from 76% the prior month, 20% expect it to be the same compared to 19% in August, and 7% expect it to be lower compared to 5% in August. A majority (78%) of companies have not furloughed or laid off employees since the start of the pandemic.

    

When asked about the outlook for the future, MCI-EFI survey respondent Dave Fate, president and CEO, Stonebriar Commercial Finance, said, “The equipment finance industry has always been resilient. The debt and equity markets are strong with lots of liquidity, and election noise will be over soon.”

    

Here are the results of the September survey:


  • The overall MCI-EFI is 56.5, an increase from the August index of 48.4.

     
  • When asked to assess their business conditions over the next four months, 35.7% of executives responding said they believe business conditions will improve over the next four months, up from 24.1% in August. However, 46.4% believe business conditions will remain the same over the next four months, a decrease from 51.7% the previous month, and 17.9% believe business conditions will worsen, a decrease from 24.1% in August.

     
  • Of those who responded, 28.6% believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 13.8% in August. On the other hand, 64.3% believe demand will “remain the same” during the same four-month time period, a decrease from 65.5% the previous month, and demand will decline according to 7.1%, a decrease from 20.7%.

     
  • Of those who responded, 17.9% expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 17.2% in August. Most executives, 78.6%, indicate they expect the “same” access to capital to fund business, an increase from 75.9% in August, and 3.6% expect “less” access to capital, a 6.9% decrease.

     
  • When asked, 17.9% of the executives report they expect to hire more employees over the next four months, up from 13.8% in August. No change in headcount over the next four months is expected by 71.4% of respondents, a 69% increase from August, and 10.7% expect to hire fewer employees, down from 17.2% the previous month.

     
  • None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. Of those who responded, 46.4% of the leadership evaluate the current U.S. economy as “fair,” down from 48.3% in August, and 53.6% evaluate it as “poor,” up 51.7%.

     
  • Half (50%) of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 31% in August, 39.3% indicate they believe the U.S. economy will stay the same, a decrease from 44.8% last month, and 10.7% believe economic conditions in the United States will worsen over the next six months, down from 24.1% the previous month.

     
  • In September, 28.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 31%. And, 71.4% believe there will be “no change” in business development spending, an increase from 48.3% in August. None believe there will be a decrease in spending, down from 20.7%.

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