The equipment finance industry saw new business volume decrease 7 percent in 2020, according to the 2021 Survey of Equipment Finance Activity (SEFA) from the Equipment Leasing and Finance Association (ELFA).
This marked the first time in a decade that businesses decreased their overall spending on capital equipment, but is less than the double-digit drop expected due to the pandemic.
“We are pleased to share the results of the 2021 Survey of Equipment Finance Activity,” said ELFA President and CEO Ralph Petta.
“While 2020 certainly presented serious challenges, the equipment finance business, overall, showed remarkable resilience and durability, with the industry showing only a single-digit decline in year-over-year new business volume,” said Ralph Petta, ELFA president/CEO, in a prepared statement. “As we look to the future, more recent data collected in the first two quarters of 2021 suggest that equipment finance activity should accelerate as overall conditions in the U.S. economy improve.”
How financing fared in 2020
New business volume decreased in 2020 after 10 consecutive years of growth. Following declines in new business volume in 2008 and 2009 during the Great Recession, volume increased year-over-year in 2010 through 2019.
Banks saw a 10.3 percent decrease in new business volume, captives saw a 1.6 percent decrease, and independents saw a 2.5 percent increase. New business volume dropped 14.6 percent in the large-ticket segment and 9.2 percent in middle ticket; small-ticket maintained their new business volume levels.
The top five most-financed equipment types were IT & related technology services, transportation, construction, agricultural, and industrial/manufacturing. The top five end-user industries representing the largest share of new business volume were services, agriculture, industrial & manufacturing, wholesale/retail, and construction.
Use of electronic documents increased significantly in 2020 over 2019, as adoption of digital tools rose during the pandemic. The share of respondents who used electronic documents to fund at least some of their new business volume grew from 52 percent to 72 percent.