ELFA’s Monthly Leasing and Finance Index for August down 14% from July

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity from 25 companies representing a cross section of the $900 billion equipment finance sector, showed their overall new business volume for August was $8.5 billion, up 21 percent year-over-year from new business volume in August 2020. Volume was down 14 percent month-to-month from $9.9 billion in July.

Year-to-date, cumulative new business volume was up 10 percent compared to 2020.

Receivables over 30 days were 1.8 percent, down from 1.9 percent the previous month and down from 2.4 percent in the same period in 2020. Charge-offs were 0.23 percent, up from 0.18 percent the previous month and down from 0.75 percent in the year-earlier period.
Credit approvals totaled 76.3 percent, down from 76.5 percent in July. Total headcount for equipment finance companies was down 14.1 percent year-over-year, a decrease due to significant downsizing at an MLFI reporting company.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in September is 60.5, a decrease from the August index of 66.6.

ELFA President and CEO Ralph Petta said, “August data show some softness in equipment demand resulting from a mix of summer doldrums, continued supply chain disruptions and lingering pandemic-related woes. Business optimism, which peaked earlier in the summer, also has waned somewhat. However, when compared to where the economy and equipment finance business were a year ago, with the COVID-19 virus raging throughout the country, August new business volume is wholly acceptable.”

Jeffrey Hilzinger, President and CEO, Marlin Capital Solutions, said, “2021, while much better than 2020, continues to be a challenging period for the equipment finance industry. While demand for equipment remains strong, August was the second consecutive month of reduced origination volume for the industry. Supply chain issues continue to be a key driver underlying this trend and seem to have worsened in recent months. On the positive side, approval rates have remained at pre-COVID levels and portfolio delinquencies and charge-offs remain at historically low levels.”

The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S.