AUSTIN, Texas — Equipment financing is projected to increase into 2025, driven by technology advances and easing inflation.
Of roughly 600 businesses, 42% plan to increase their equipment and software acquisitions in 2025, while 42% expect acquisition volume to stay the same, according to the Equipment Leasing and Finance Foundation’s industry Horizon Report, released Oct. 28. Among the businesses with plans to increase acquisitions, 44% expect to ramp up investment activity by 51% or more.
Technology advancements are the most influential factor behind the anticipated uptick in equipment purchasing. Sophisticated technology on new equipment could be the driving force, Jeff Jensen, vice president of Keybridge, ELFF’s research partner for economic reports and resources, said Oct. 28 at the Equipment Leasing and Finance Association (ELFA) convention.
“I think, particularly because of the pandemic, there were some people that maybe wanted to get an update that couldn’t because of some of the supply chain constraints,” he said.
Future brightens
The equipment finance industry is projected to grow 4.3% to $1.4 trillion in 2024, according to the report. The market is expected to grow 2.4% in 2025 and 7.3% over the next three years to nearly $1.5 trillion.
Equipment lenders are optimistic about the future as many businesses look to capitalize on more potential interest rate cuts this year and next year, Wintrust Specialty Finance President and Chief Executive David Normandin said at the ELFA event.
“I think getting the election out of the way, regardless of who wins, people will get back to work and invest in their businesses,” he said. “The [Federal Reserve] is going to continue to drop rates.”
Portfolio management will be a key to success as lenders continue to grapple with repossessed assets stemming from pandemic-related challenges while new customers emerge, Normandin said.
