Equipment Finance Industry Confidence Rises in February
According to the Equipment Leasing & Finance Foundation’s February 2021 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI), overall confidence in the equipment finance market is 64.4, an increase from the January index of 59.6.
“Although we believe the 2021 PPP program will suppress capital needs for a short period of time among SMBs, we’re expecting a positive rebound from a year’s worth of pent-up pandemic demand,” Brad Peterson, CEO of Channel Partners Capital, said. “Our post-pandemic portfolio looks fantastic and we expect the strong performance to continue through 2022. We believe this is the time to invest in SMB marketplace opportunities.”
When asked to assess their business conditions over the next four months, 46.2% of executives said they believe business conditions will improve over the next four months, up from 33.3% in January. Meanwhile, 46.2% believe business conditions will remain the same over the next four months, a decrease from 59.3% the previous month, and 7.7% believe business conditions will worsen, a slight increase from 7.4% in January.
In February, 42.3% of the survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, up from 33.3% in January. At the same time, 53.9% believe demand will “remain the same” during the same four-month time period, a decrease from 59.3% the previous month, while 3.9% believe demand will decline, down from 7.4% in January.
“We are seeing pent-up demand for equipment and structure investment. Due to the continued uncertainty caused by COVID and the low interest rate environment, customers are preferring to finance rather than pay cash,” Michael Romanowski, president of Farm Credit Leasing, said.
The ELFF found that 23.1% of respondents expect more access to capital to fund equipment acquisitions over the next four months, up from 18.5% in January. The majority of respondents (76.9%) expect the “same” access to capital to fund business, a decrease from 81.5% last month, while no respondents expect “less” access to capital, unchanged from the previous month.
When asked, 38.5% of the executives said they expect to hire more employees over the next four months, up from 25.9% in January. Meanwhile, 61.5% expect no change in headcount over the next four months, a decrease from 66.7% last month. No respondents said they expect to hire fewer employees, down from 7.4% in January.
None of the leadership evaluated the current U.S. economy as “excellent,” unchanged from the previous month. Most of the leadership (76.9%) evaluated the current U.S. economy as “fair,” down from 77.8% in January, while 23.1% of leadership evaluated it as “poor,” up from 22.2% last month.
Exactly 50% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 51.9% in January. Meanwhile, 38.5% believe the U.S. economy will “stay the same” over the next six months, an increase from 37% last month. In addition, 11.5% believe economic conditions in the U.S. will worsen over the next six months, up slightly from 11.1% the previous month.
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