The Equipment Leasing & Finance Foundation released the September 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) today. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $900 billion equipment finance sector. Overall, confidence in the equipment finance market is 56.5, an increase from the August index of 48.4.

The Foundation also released highlights of the COVID-19 Impact Survey of the Equipment Finance Industry, a monthly survey of industry leaders designed to track the impact of the coronavirus pandemic on the equipment finance industry. From 75 survey responses collected from September 1-13, results show that 91 percent of equipment finance companies have offered payment deferrals, including extensions, modifications or restructuring. In addition, 73 percent of companies expect that the default rate will be greater in 2020 than in 2019, down from 76 percent last month; 20 percent expect it to be the same compared to 19 percent in August; and 7 percent expect it to be lower compared to 5 percent last month. A majority (78 percent) of companies have not furloughed or laid off employees since the start of the pandemic. Comments from survey respondents follow MCI-EFI survey comments below, and additional survey results and analysis are available at https://www.leasefoundation.org/industry-resources/covid-impact-survey/.

When asked about the outlook for the future, MCI-EFI survey respondent Dave Fate, President and CEO, Stonebriar Commercial Finance, said, “The equipment finance industry has always been resilient. The debt and equity markets are strong with lots of liquidity, and election noise will be over soon.”

September 2020 Survey Results

The overall MCI-EFI is 56.5, an increase from the August index of 48.4.  

• When asked to assess their business conditions over the next four months, 35.7 percent of executives responding said they believe business conditions will improve over the next four months, up from 24.1 percent in August; 46.4 percent believe business conditions will remain the same over the next four months, a decrease from 51.7 percent the previous month; and 17.9 percent believe business conditions will worsen, a decrease from 24.1 percent in August.
• 28.6 percent of the survey respondents believe demand for leases and loans to fund capital expenditures (CAPEX) will increase over the next four months, up from 13.8 percent in August; 64.3 percent believe demand will “remain the same” during the same four-month time period, a decrease from 65.5 percent the previous month; and 7.1 percent believe demand will decline, a decrease from 20.7 percent in August.
• 17.9 percent of the respondents expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 17.2 percent in August; 78.6 percent of executives indicate they expect the “same” access to capital to fund business, an increase from 75.9 percent last month; and 3.6 percent expect “less” access to capital, a decrease from 6.9 percent the previous month.  
• When asked, 17.9 percent of the executives report they expect to hire more employees over the next four months, up from 13.8 percent in August; 71.4 percent expect no change in headcount over the next four months, an increase from 69 percent last month; and 10.7 percent expect to hire fewer employees, down from 17.2 percent the previous month.
• None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month; 46.4 percent of the leadership evaluate the current U.S. economy as “fair,” down from 48.3 percent in August; and 53.6 percent evaluate it as “poor,” up from 51.7 percent last month.
• 50 percent of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 31 percent in August; 39.3 percent indicate they believe the U.S. economy will “stay the same” over the next six months, a decrease from 44.8 percent last month; and 10.7 percent believe economic conditions in the U.S. will worsen over the next six months, down from 24.1 percent the previous month.
• In September, 28.6 percent of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 31 percent last month; 71.4 percent believe there will be “no change” in business development spending, an increase from 48.3 percent in August; and none believe there will be a decrease in spending, down from 20.7 percent last month.

September 2020 MCI-EFI Survey Comments from Industry Executive Leadership

Bank, Small Ticket
“Steady application counts and approval ratios continue to tell the story of opportunity in our space. I expect the election cycle will be turbulent and affect business.” – David Normandin, CLFP, President and CEO, Wintrust Specialty Finance

Independent, Middle Ticket
“We are seeing pipeline opportunity remaining steady across a broad spectrum of industries.” –  Daniel Krajewski, President and CEO, Sertant Capital, LLC

Executive Comments from COVID-19 Impact Survey of the Equipment Finance Industry

Independent, Small Ticket
“I am more positive than I was three months ago regarding the duration of the recession and the future in general. The economic stimulus was very well timed and now people are quickly adjusting to living with COVID. In certain industries spending has increased dramatically.” –  Christopher Enbom, CLFP, CEO and Chairman, AP Equipment Financing

“I have confidence that the equipment finance industry will always be a key element in providing capital to continue to support the supply chain. In an election year, with a pandemic and extensive social unrest, the immediate and medium-term future is not clear. The industry is durable and creative and will always be on the front lines of equipment acquisition and asset management.” – Valerie Hayes Jester, President, Brandywine Capital Associates, Inc.

Independent, Middle Ticket
“While a few industries (e.g., restaurant, airlines, hospitality, elective health care, etc.) will be adversely impacted until COVID restrictions are lifted, most other industries are experiencing revenue improvement. Thus, short term will experience limited recovery, and medium and long term should be returning stronger than before the COVID shutdown of the economy.” – J.D. Jenks, CEO, Global Financial & Leasing Services, LLC

To participate in the COVID-19 Impact Survey of the Equipment Finance Industry:  The Foundation invites all regular ELFA member companies to participate each month. Survey responses are limited to one per company. If you did not receive a survey and would like to participate, please contact Stephanie Fisher, sfisher@leasefoundation.org, by September 30 to determine eligibility for inclusion in the October survey.