U.S. Bank sees rising equipment conversations, targeted OEM investment

Equipment finance activity continued to strengthen in the second quarter as lenders increased their use of digital contracting and manufacturers invested in equipment to improve productivity and address labor challenges. 

E-contracting adoption in equipment finance increased 15% quarter over quarter and 3% year over year, while adoption has climbed 53% during the past four years, according to Wolters Kluwer. Growth occurred across banks, independents, vendor finance programs and specialty finance providers. 

Broader equipment finance activity accelerated in July, as seasonally adjusted new business volume reached a record $14.3 billion, up 34.3% from June, while year-to-date volume increased 16.8% YoY, according to Equipment Leasing and Finance Association’s CapEx Finance Index.  

ELFA projects 2026 volume of $137.3 billion, 14% above the previous annual record set in 2024. 

The growth comes as manufacturers remain willing to make targeted capital investments, Anita Colvin, general manager of Manufacturing Vendor Services, a division of U.S. Bank Equipment Finance, told Equipment Finance News. Manufacturing Vendor Services supports manufacturers, distributors and OEMs. 

“Equipment conversations are increasing and, without a doubt, companies are investing,” Colvin said, describing the market as “cautiously optimistic.” 

Companies remain selective amid workforce challenges, cash pressures and supply chain considerations, with investment concentrated on equipment that improves productivity, quality and competitiveness, she said. 

Equipment investment increased at an annualized rate of more than 15% in both the first and second quarters, while core capital goods shipments increased more than 9% YoY, the fastest pace since 2022, according to the Equipment Leasing and Finance Foundation. 

Finance vendor adoption grows 

Small-ticket lenders and vendor- and manufacturer-affiliated finance programs were the two largest groups contributing to e-contracting growth during the quarter, Matthew Babcock, digital lending product strategist at Wolters Kluwer, told EFN. 

Financing is becoming more integrated into vendor programs as speed and convenience increase in importance, Babcock said. 

The stronger equipment market also increasingly supports digital transaction growth as e-contracting matures, he said. 

“The better the market does, the better digital is probably going to do as a whole.” — Matthew Babcock, digital lending product strategist, Wolters Kluwer

Babcock also noted digital adoption can still increase during weaker market periods. 

U.S. Bank, meanwhile, is seeing increased equipment activity across machinery, fabricated metals, transportation, aerospace and defense and technology manufacturing. 

Colvin said she recently met with manufacturers that are adding machinery to support defense demand and data center projects. 

Manufacturers also are investing in equipment that generates more output from their existing workforce, she said. 

For digital contracting, the Q2 increase represents both broader adoption and heavier use among established users, Babcock said. 

“We’re seeing growth across lender segments,” he said. “We’re also seeing growth deepen amongst those established users.” 

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