ELFA: May New Business Volume Up 11% Y/Y, 6% YTD

June 26, 2024, 07:22 AM

Filed Under: Equipment Leasing & Finance Association

Related: Ascentium Capital, Dave Lyder, Leigh Lytle, MLFI-25, Monthly Leasing and Finance Index (MLFI-25)

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), a survey of economic activity from 25 companies representing a cross section of the $1 trillion equipment finance sector, reports that in May:

New business volume (NBV) was $10.2 billion, up 11 percent from May 2023.
Month over month, NBV was down 7 percent from $11.0 billion in April 2024.
Year to date, cumulative NBV was up 6 percent compared to 2023.

Additional findings include:

Receivables over 30 days were 2.3 percent, up from 2.0 percent the previous month and up from 2.0 percent in the same period in 2023.
Charge-offs were 0.4 percent, unchanged from the previous month and up from 0.3 percent in the year-earlier period.
Credit approvals totaled 75 percent, unchanged from April.
Total headcount for equipment finance companies was up 1.5 percent year-over-year.

Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index in June is 50.2, steady with the May index of 50.7.

ELFA President and CEO Leigh Lytle said, “Overall, May MLFI results show solid performance with continued double-digit year-over-year growth in originations and positive year-to-date growth. Credit quality is mixed, but within historical norms. The drop in volume from April could be an indication that some businesses are holding off on acquiring equipment until interest rates come down. We’ll be monitoring whether the effect of higher rates over the summer and into the fall will further delay equipment investments, which would be a headwind to economic activity through the second half of the year.”

Dave Lyder, EVP and Group Manager, Ascentium Capital, said, “We expect to see solid, yet temperate demand for equipment financing through 2024. Small businesses are getting accustomed to higher-for-longer rates and higher equipment prices due to inflation. However, some are pausing any new investments for now. So, lenders need to remain vigilant, not overstepping in challenged areas while, instead, focusing capital allocation toward areas where they expect the best returns. Small businesses remain very resilient. Though with higher rates and stubborn inflation, this is a time for lenders to lean further into their roles of providing practical advice to help clients make the most strategic financial choices.”