In October, U.S. companies borrowed 8% less to finance equipment investments compared to the same month last year, according to the Equipment Leasing and Finance Association (ELFA). This decline was attributed to high interest rates that some businesses felt the impact of. Despite a slight increase in losses and delinquencies reported by ELFA, year-to-date cumulative new business volume was up 0.7% compared to 2022.
According to Ralph Petta, CEO of ELFA, the softness in credit quality is indicative of the challenges experienced by some businesses as they operate in a higher interest rate environment, constrained in some sectors by reports of a pull-back in bank lending. Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers, said that the trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment, and supply chain disruption.
In October, U.S. companies signed up for $10.4 billion worth of new loans, leases and lines of credit, up from $9.7 billion a month ago, ELFA said. Credit approvals also improved month-on-month, touching 76% in October, up from 73.6% in September. The Equipment Leasing & Finance Foundation reported its confidence index in November stood at 42.8