Equipment lenders look to niche markets for growth
Energy, electrical equipment investment ticks up 3.1% YoY
Equipment finance providers are expanding into growth verticals like solar, supporting domestic manufacturing reinvention and offering flexible financing strategies, in part to navigate tariffs, regulatory shifts and recession risks.
Pathward’s equipment finance team’s strategy targets niche and underserved markets where larger banks have pulled back, Rick Pierman, vice president of commercial finance business development, told Equipment Finance News.
The company is applying the philosophy that there are no bad deals, only bad structures, he said, noting that Pathward is finding opportunities in oil and gas as well as the mining space.
“Transportation is another [market] where there’s been some pressure — whether it’s fuel costs, freight rates are down and fuel costs are up — but we’re able to mitigate that through structure.” — Rick Pierman, vice president of commercial finance business development, Pathward
Energy investment on the rise
Investment in energy and electrical equipment, which includes oil, gas, mining and solar equipment, rose 12.7% quarter over quarter in Q2 2025 and 3.1% year over year and represents the only “strong and accelerating” vertical, according to the Equipment Leasing and Finance Foundation’s August 2025 U.S. Equipment and Software Investment Momentum Monitor. The Energy and Electrical Momentum Index rose to 111.3 in August, up compared with 109.6 in July, signaling stronger annual growth over the next two quarters.
By focusing on financial inclusion and tailoring financing structures to underserved industries, financiers, including Pathward, have found success in areas overlooked or exited by traditional lenders, Pierman said.
In addition, short-term risks create the need for equipment lenders to prepare customers, de-risk the business and target verticals for future growth, such as solar, Christopher Murphy III, chairman and chief executive at 1st Source Corporation, the parent company of South Bend, Ind.-based 1st Source Bank, told EFN. These risks, he said, stem from:
- A potential recession;
- Falling equipment values;
- Uncertain federal versus local funding; and
- U.S. deficit pressures.
“We spent three to five years studying solar before we got into it, and today we do solar from almost coast to coast,” Murphy said. “We’re not doing the big stuff, but we find a niche that we can be in, where we can add value, where we understand it, and then we go and work that area, so I would look for other verticals that are similar to that.”
Navigating policy changes, tariffs
Regulatory and policy changes, including tariffs, pose challenges and opportunities for lenders, as many customers refashion themselves by upgrading or expanding their equipment product segments, Christopher Soupal, divisional president and revenue lending officer at Pathward, told EFN.
“There are a lot of businesses and industries that are reinventing themselves and ramping up domestic manufacturing, and our pipeline and future, it’s never been busier and stronger,” he said. “All of the companies that we work with and prospects as we’re meeting them, are reinventing themselves and adding to their and/or updating their equipment.”
Tariffs have also boosted demand for equipment lenders such as Trinity Capital and its U.S.-focused equipment finance business. Potential rate cuts could lower borrowing costs, drive prepayments and generate additional fee income to support growth, CEO Kyle Brown said during Trinity’s Aug. 6 earnings call.
“Trinity Capital remains well-positioned in the private credit market, with a focus on late-stage, venture-backed companies in the lower middle market. Overall, we are very bullish about the opportunities before us.” — Kyle Brown, CEO, Trinity Capital
As customers prioritize cash preservation and expense optimization amid high tariffs and interest rates, financing strategies such as extending loan terms, debt products with tax benefits, and tools like sale-leasebacks should help reduce costs and improve liquidity, Anthony Sasso, head of TD Equipment Finance, told EFN.
“Some clients, to this very day, will buy assets in cash because they are in an environment at a certain time where cash was available, going into periods of uncertainty,” he said.
Check out our exclusive industry data here.
