Opposing market forces affect equipment lender confidence
28.6% of lenders expect increased demand over next 4 months
Equipment lender sentiment is deadlocked as economic headwinds collide with positive CapEx spending.
The Equipment Leasing and Finance Association‘s (ELFA) Monthly Confidence Index landed at 63.7 this month, unchanged from June, according to ELFA’s report today.
Some lenders are optimistic amid “one of the strongest capital expenditure cycles we’ve seen in years, creating sustained demand across the markets we serve,” Mark Bonanno, president and chief revenue officer at North Mill Equipment Finance, stated in the report.
“At the same time, institutional investors and private credit providers continue to recognize the value of short-duration, cash-flowing equipment finance assets, bringing additional capital into the market as banks become more selective,” he said.
The emergence of AI is another catalyst, “giving independent finance companies the same capabilities that were once reserved for the largest financial institutions” and enabling faster credit decisions, streamlined documentation, improved pricing and enhanced fraud detection, Bonanno said.
Other lenders, meanwhile, believe that it’s “very difficult to have sustained confidence” due to geopolitical uncertainty, Charles Jones, senior vice president at 1st Equipment Finance, stated in the report.
“Just when it looks like there may be a resolution, things change and we are all waiting for the other shoe to drop,” he said.
Of roughly 30 surveyed lenders, 22.7% expect improved business conditions over the next fourth months, down from 30.4% in June, and 28.6% expect increased demand over that stretch, down from 31.8%, according to the report. However, 33.3% of lenders anticipate greater access to capital over the next four months, up from 27.3%.
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