U.S. Business Equipment Loanings See an 8% Drop in October

In October, U.S. companies borrowed 8% less to finance their equipment investments compared to the same month last year, according to the Equipment Leasing and Finance Association (ELFA). Some businesses felt the impact of high interest rates. ELFA reports on the economic activity of the nearly $1-trillion equipment finance sector and surveys banks like Bank of America and financing affiliates of equipment makers.

Despite a strong U.S. economy with sound metrics, participants in ELFA’s survey reported slight increases in both losses and delinquencies, said Ralph Petta, CEO of ELFA. This suggests that some businesses are struggling in a higher interest rate environment, with supply chain disruptions and other challenges constraining their operations.

Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers, explained that these trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment issues, and supply chain disruptions.

In October 2023, U.S. companies signed up for $10.4 billion worth of new loans, leases and lines of credit, up from $9.7 billion in September 2023, ELFA said. Credit approvals also improved month-on-month to 76% in October 2023 from 73.6% in September 2023.

ELFA’s non-profit affiliate, the Equipment Leasing & Finance Foundation (ELFF), reported its confidence index stood at 42.8 in November 2023 an increase from 40