• Wed. Dec 6th, 2023

U.S. Business Equipment Loanings See an 8% Drop in October


Nov 21, 2023

According to the Equipment Leasing and Finance Association (ELFA), U.S. companies borrowed 8% less to finance equipment investments in October compared to a year ago. Some businesses felt the impact of high interest rates, which affected their ability to secure financing for their equipment investments. ELFA reports on the economic activity for the nearly $1-trillion equipment finance sector and surveys banks like Bank of America and financing affiliates of equipment makers.

Year-to-date, cumulative new business volume was up 0.7% compared to 2022, despite a set of sound metrics in the U.S. economy, participants reported slight increases in both losses and delinquencies. This softness in credit quality is indicative of the challenges experienced by some businesses as they operate in a higher interest rate environment, constrained in some sectors by reports of a pull-back in bank lending.

“The trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment, and supply chain disruption,” said Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers. The equipment finance sector has been impacted by these factors as well as other macroeconomic indicators such as rising energy prices and geopolitical tensions.

In October, U.S. companies signed up for $10.4 billion worth of new loans, leases and lines of credit, up from $9.7 billion a month ago according to ELFA’s data. Credit approvals also improved month-on-month, touching 76% in October compared to 73.6% in September indicating that some companies were able to secure financing despite challenging economic conditions

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