October Business Borrowing For Equipment 8% Lower Than Previous Year
According to the latest monthly leasing and finance index survey from the Equipment Leasing and Finance Association, “overall new business volume for October was $7.7 billion,” an 8% decline in new business volume from October 2014. This also represented an 8% decrease from September’s reported $8.4 billion in new sales volume. For the year-to-date, however, cumulative new business volume was up 3% from 2014. The survey also found post-30 day receivables were 1.0%, down from 1.1% in September and 1.26% in October 2014. Charge-offs were unchanged from September at 0.27%. Total credit approvals were 80.1% in October, down from 80.5% in September. Commenting on the survey’s results, ELFA President and CEO William Sutton said, “Performance in the equipment finance market was mixed in October: new business volume weakened somewhat — both in terms of the month- and year-earlier periods — while portfolio quality remained steady. Some members report a softening in the demand side of the business and it remains to be seen whether and to what extent the specter of rising interest rates will impact the sector.” Reuters reported that the index comes from a survey of 25 members that provide financing for business equipment, including Bank of America, BB&T, CIT Group, and affiliates for financing through Caterpillar, Canon, Deere & Co, Verizon, and Siemens. The index is a measurement of the volume of commercial equipment being financed across the US and is meant to be a complement to the Department of Commerce’s later data on durable goods orders.
What This Means For Small Businesses
The latest ELFA leasing and finance survey results are a possible indication of a slowdown in the US industrial sector, which has been worsening in the latter half of the year. As NFIB Chief Economist William Dunkelberg said in the latest NFIB report on Small Business Economic Trends, “GDP growth languished in Q3, and will not likely impress in Q4. The industrial sector is weakening and the small business sector has not returned to its historical role in the production of GDP and jobs.” It appears likely that small businesses involved in operations that use heavy equipment may be struggling to rebound from a sluggish economy.
Additional Reading
NFIB previously reported on durable goods orders.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
