According to the Equipment Leasing and Finance Association (ELFA), U.S. companies borrowed 8% less to finance equipment investments in October compared to a year ago, indicating a setback in the nearly $1-trillion equipment finance sector. The decline was attributed to high interest rates, which affected some businesses.
Despite positive economic metrics, ELFA CEO Ralph Petta reported slight increases in both losses and delinquencies among participants, suggesting that challenges experienced by some businesses as they operate in a higher interest rate environment may be constraining growth in certain sectors. This trend is consistent with market turmoil resulting from quantitative tightening, inflation, employment, and supply chain disruption.
Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers, echoed these sentiments, saying that the trends are indicative of the challenges faced by some businesses as they navigate the current economic environment.
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. Credit approvals also improved month-on-month to 76%, up from 73.6% in September. However, despite these positive signs for credit availability, ELFA’s non-profit affiliate noted that its confidence index fell slightly to 42.8 in November from 40.1 in October due to ongoing concerns about macroeconomic factors affecting business operations.