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A new study by PayNet, Inc. a firm that risk management tools to the commercial credit industry, shows businesses served by equipment leasing companies are poised to be the growth engine to keep the U.S. economy out of a double dip recession.
Utilizing PayNet’s proprietary database based on the U.S. small-business economy worth over $800 billion in loan value, the recent Thomson Reuters PayNet Small Business Lending Index, which measures the amount of borrowing activity by millions of small businesses, marks a rapid expansion rising 28% in May and 25% in June from the same months a year earlier.
Agriculture continues to outperform based on strong export demand. The Transportation and Construction sectors, among the most seriously hurt in the recession, are showing signs of a comeback with originations rising 16% and 7% respectively. Retail equipment remains stalled, in line with reduced consumer confidence. Financing of medical equipment is the worst performing sector of all with new originations falling 17% on a year over year basis.
According to PayNet’s AbsolutePD, a leading default indicator, equipment defaults will improve overall to 2.9% by year-end 2011. Improvement will be seen in all major equipment types. “Defaults on trucking equipment continue to fall from the double-digit rates seen in 2009. Professional services related equipment, such as copiers, is also improving to levels not seen since well before the last recession” says William Phelan, president of PayNet, Inc.
“Agriculture equipment has been on tear over the past few years. Strong export demand combined with high commodity prices have made agriculture the sector of choice,” Phelan reports. “Agriculture equipment backed loans and leases continue to improve in credit quality falling 39% to a forecasted 1.7% default rate from their already low levels.” added Phelan.
PayNet will be part of an exclusive panel with leading risk and top industry leaders to present Business Cycle Management – Coming Full Circle? Timing & Targeting Prudent Growth at the Equipment Leasing Finance Association’s (ELFA) National Convention, on Tuesday, October 25, 2011 in San Antonio, Texas.
“With an uncertain recovery underway, most lenders are examining this data and trying to determine whether now is the time to start expanding again, and if so, how,” added Phelan. “The last recession showed lenders data driven analysis improves practices for safe and profitable growth.”
PayNet Inc. is the premier provider of risk management tools and market insight to the commercial credit industry, collecting real-time loan information from leading U.S. lenders and turning it into actionable intelligence. The company's proprietary database -- updated weekly -- is the richest and largest collection of commercial loans and leases, encompassing more than 17 million current and historic contracts worth over $800 billion. Using state-of-the-art analytics, PayNet converts raw data into real-time market intelligence and predictive information that subscribing lenders use to manage risk, lower operating costs, originate more loans and improve their business strategy. The company is based in Skokie, Illinois.