Confidence among equipment finance lenders continued to rise in July, even though none of those surveyed rated the United States economy as “excellent.”
The Equipment Leasing and Finance Foundation’s (ELFF) Monthly Confidence Index rose to 50.7 in July, up from 50.2 in June and 46.4 in July 2023.
No equipment finance lenders rated the U.S. economy as “excellent,” down from 3.9% in June. However, the number of respondents who said the economy was “fair” rose to 84.6%, up from 76.9% in June. Some 15.4% of respondents rated it as “poor,” down from 19.2% in June.
A move by the Federal Reserve’s lowering interest rates could create lending difficulties, Mark Bonanno, president and chief operating officer of Northern Mill Equipment Finance, said in the ELFF release.
“My main concern is the Fed will remain stubbornly restrictive and overshoot sticking to a 2% inflation mandate,” he said. “Very little makes me optimistic, with the impending election most likely causing a stalemate.”
Economic conditions and the presidential election will likely keep the market challenging for the next few months, Ken Whitelaw, head of global program management in food and agriculture for Eindhoven, Netherlands-based lender DLL Group told Equipment Finance News.
“The general consensus is net farm income will decline and therefore demand has partially decreased,” he said. “However, it should be noted that … there remains a healthy balance between new and used equipment pricing and availability.”
Capital access
In the survey, about 19.2% of equipment finance lenders expected more access to capital, unchanged from June, according to the ELFF release. However, 76.9% of respondents expected the same access, up from 73.1% in June. Around 3.9% expect less access to capital, down from 7.7% in June.
“When the market softens, the value of a competitive vendor-supported retail finance offer increases,” Whitelaw said.
Phoenix-based lender Trinity Capital’s equipment finance team funded $113 million in Q2, due to an expectation for growth in the sector, Director of Investor Relations Ben Malcolmson told EFN.
“We’re seeing tremendous tailwinds in the equipment financing sector,” he said.
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