In March, the equipment finance sector experienced a notable rise in new business volume as reported by the CapEx Finance Index (CFI) from the Equipment Leasing and Finance Association (ELFA). This increase reflects growing demand for equipment leasing despite underlying economic uncertainties. While credit approvals have seen an uptick, financial conditions indicate potential stress within the industry.

Growth Momentum Amidst Economic Challenges

The equipment finance sector demonstrated robust growth in March with total new business volumes reaching $10.4 billion among ELFA members. This marks a 7.0% seasonally adjusted increase from February and represents one of the highest monthly growth rates in recent years. Year-over-year figures show a positive trend, though year-to-date totals lag slightly behind last year. Despite this progress, concerns remain regarding financial health due to rising receivables and charge-offs.

This section delves into the specifics of the sector's performance. New business volumes have risen consecutively for two months, recovering ground lost earlier in the year. Notably, the small ticket index surged significantly, indicating widespread financing activity across various institution types. Banks and captives witnessed double-digit monthly growth, whereas independent entities expanded modestly. Over the past 12 months, banks have shown remarkable volume growth, contrasting with declines at captives and independents. Although these numbers highlight a strong demand for equipment, they also underscore the need for vigilance concerning deteriorating financial indicators.

Credit Trends and Industry Outlook

Credit approvals reached their highest level since August 2024, climbing to 76.0%. This improvement suggests increased willingness among lenders to extend credit despite broader economic uncertainties. However, aging receivables and charge-offs are on the rise, signaling potential challenges ahead for the industry. These trends could impact employment levels and overall confidence within the sector.

Further analysis reveals that employment in the equipment financing industry has declined over the past year, affecting all types of institutions. Credit approval rates, while elevated, mask deeper issues such as rising charge-offs and increasing aging receivables. The latter metrics have climbed notably, especially at banks and independent entities, although captives have seen slight improvements. As the industry navigates through anticipated volatility in the coming months, stakeholders must monitor these financial indicators closely. Comments from industry leaders emphasize the importance of adapting to changing economic conditions, ensuring continued support for businesses requiring equipment financing solutions. Additionally, the Monthly Confidence Index plummeted in April, reflecting heightened uncertainty driven by tariff discussions.