LAS VEGAS — Equipment financiers and other small business executives foresee trends such as regulations and consolidation affecting the lending industry over the next 12 months.
The potential for further Federal Reserve rate cuts and the result of the presidential election could change the state of the equipment finance industry. Still, some trends are likely to persist through the end of 2024 and into 2025, speakers said during a Sept. 23 panel at the B2B Finance Expo.
1. Lenders will still need to work together and with regulators, James Webster, executive chairman of Great River, N.Y.-based lender Rok Financial, said during the panel.
“We’ve got to work together a little bit, otherwise somebody else is going to set that for us, and that might not work for anybody or everybody.”
2. Technological improvements in the industry should continue to benefit originations, especially in the Small Business Administration loan sector, Burke Purcell, chief executive of Orangeburg, S.C.-based lender LoanBud, said during the panel.
“Technology is going to get to a place where SBA loans can be originated and closed in a matter of days,” he said. “It will compete with the short-term working capital space.”
Consolidations, risk sharing in lending
3. Consolidation is expected to carry over into the next 12 months, especially as it pertains to independent sales organizations (ISOs), Peter Ribeiro, CEO of Las Vegas-based Capital Gurus, said during the panel.
“I do see some of the lenders purchasing, buying out or partnering with the ISOs, some lenders in the working cap space buying ISO shops, and some of the lenders on the equipment side consolidating together,” he said. “That will continue to happen as the barriers to entry become more difficult with regulations, and the cost per acquisition keeps on skyrocketing.”
Overall U.S. deal value in the first five months of 2024 totaled $535 billion, up 29.9% year over year, according to PwC’s U.S. Deals 2024 midyear outlook.
4. As consolidation remains high, other risk-sharing opportunities could lead to a decline in embedded lending, Georgina Merhom, founder and CEO of New York-based data analytics firm Solo, said during the panel.
“I think that the embedded space is going to die,” she said. “They’re going to look more like guarantors, or in the money and not the flow, but don’t actually underwrite.”
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