Equipment Finance Activity Bounces Back After Pandemic-Fueled Decline
Oct. 18, 2022
ELFA’s 2022 survey of equipment finance activity reveals increase in new business volume in 2021.
By Chemical Processing Staff
The equipment finance industry saw new business volume increase 7.4% in 2021, according to the 2022 Survey of Equipment Finance Activity (SEFA) released by the Equipment Leasing and Finance Association (ELFA). This is a marked improvement from a decline of 7% in 2020—the first decrease in overall spending on capital equipment in a decade—resulting from the impact of the pandemic. The 2022 SEFA reveals key statistical, financial and operations information for the $900 billion equipment finance industry, based on a comprehensive survey of 100 equipment finance companies.
“After averting a worst-case scenario in 2020 with the industry showing only a single-digit decline in year-over-year new business volume, equipment finance companies showed their characteristic resilience coming back stronger than ever in 2021. It’s encouraging that we’re seeing strong portfolio performance again this year despite economic uncertainty,” says ELFA President and CEO Ralph Petta in a press release from the organization.
Survey highlights include:
New business volume was back in positive territory in 2021 after the pandemic broke a 10-year streak of consecutive year-over-year growth in 2020. Among survey respondents nearly 72% experienced an increase in volume in 2021.
By organization type, banks saw a 3.6% increase in new business volume, captives saw a 14.6% increase and independents saw a 16.4% increase. By market segment, new business volume dropped 1% in the large ticket segment and increased 3.1% in middle ticket, while small ticket surged with new business volume growth of 17% year over year.
From an asset perspective, the top-five most-financed equipment types were transportation, IT and related technology services, construction, agriculture and industrial/manufacturing. The top five end-user industries representing the largest share of new business volume were services, agriculture, industrial & manufacturing, construction and transportation.
Delinquencies declined to 1.6% overall, from 3.2% in 2020, with mining/oil & gas and transportation-railroad continuing to experience the highest delinquency rates.
Employment increased slightly by 2.2%. Independents and captives increased their headcount by 8.7% and 4.3% respectively, and banks declined marginally by -0.3%.
Work location arrangements, a new category added this year, shows that by organization type overall in 2021 work in-office full-time (at least four days a week) decreased to 9% of organizations, hybrid work increased to 33.1% and working remotely decreased to 57.9%.
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