ELFA’s Monthly Leasing and Finance Index down for January, year-over year

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 January was $8.1 billion, down 12 percent year-over-year from new business volume in January 2020. Volume was down 33 percent month-to-month from $12.1 billion in December following the typical end-of-quarter, end-of-year spike in new business activity.

Receivables over 30 days were 2.20 percent, unchanged from the previous month and up from 2.00 percent in the same period in 2020. Charge-offs were 0.47 percent, down from 0.59 percent the previous month and unchanged from the year-earlier period.
Credit approvals totaled 76.2 percent, up from 75.2 percent in December. Total headcount for equipment finance companies was down 4.9 percent year-over-year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index (MCI-EFI) in February is 64.4, an increase from the January index of 59.6.

ELFA President and CEO Ralph Petta said, “New business volume was relatively soft in January, as is typical for early Q1 business activity for many equipment finance companies. Portfolio quality for reporting companies is in the healthy range as well. Preliminary economic projections indicate that equipment finance activity should accelerate as overall conditions in the U.S. economy improve in 2021. Time will tell.”

Chris Bucher, President, Hancock Whitney Equipment Finance, LLC, said, “2021 pipelines are steady and competitive. We notice continued demand for replacement capex and are hearing several equipment vendors speak of manufacturing backlogs.”

The MLFI-25 is a barometer of the trends in U.S. capital equipment investment. Five components are included in the survey: new business volume (originations), aging of receivables, charge-offs, credit approval ratios, (approved vs. submitted) and headcount for the equipment finance business.