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Equipment Finance Confidence Rising, but Economic Uncertainties Still Prevalent

After a dip during early fall, equipment finance companies appear to be gaining confidence as 2021 winds down.

The Equipment Leasing & Finance Foundation’s November 2021 Confidence Index is now at 64.6 percent, a 3.5 percent bump over October’s 61.1 index. That’s still well below its peak of 76.1 percent in April though.

The overall MCI-EFI is 64.6, an increase from the October index of 61.1.Equipment Leasing & Finance Foundation

Inflation rates, labor shortages and ongoing supply chain issues are leaving some unsettled. “While I believe the equipment leasing and finance Industry will always perform well through various cycles, the last few months have shown a number of interesting data points,” says Dave Fate, chief executive officer, Stonebriar Commercial Finance. “Strong corporate earnings continue to drive the equity markets. The current rise in Inflation rates is alarming and seems like it will be with us for a while. Continued issues with the lack of skilled and non-skilled labor are the number one concern of most of our customers. Supply chain issues are causing real disruption and seem to have no viable plan to alleviate them. The rest of Q4 and into Q1 will be very interesting as we navigate through year-end closing in our industry and the Christmas holiday season.”

Respondents expect the following to occur over the next four months:

34.6% think business conditions will improve over the next four months, up from 25.9% in October.42.3% believe demand for capex leases and loans will increase.26.9% expect more access to capital to fund equipment acquisitions over the next four months, up from 14.8% in October. 73.1% expect the same access to capital.53.9% say they will hire more people, up from 40.7% in October.15.4% evaluate the current U.S. economy as excellent, an increase from 7.4% the previous month. 80.8% say the economy is fair.

Finally, 23.1% of the survey respondents believe that U.S. economic conditions will get better over the next six months, an increase from 22.2% in October. “Business owners are feeling much more confident and are moving forward with capital acquisitions, some that had been delayed because of the pandemic,” says Bruce J. Winter, president, FSG Capital. “Pending no flare up of COVID-19 infections in the coming months, we expect smooth sailing for the next several quarters.”

Divided by market segments, respondents were as follows: bank, 57.7%; captive finance, 7.7%; and independent finance companies, 34.6%.

The Monthly Confidence Index for the Equipment Finance Industry is a qualitative assessment of key equipment finance sector executives on both prevailing business conditions and future expectations, according to the foundation

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