Financing Confidence Up in December

Dec. 18, 2020

An index measuring confidence among executives in the equipment leasing and financing industry inched up in December, advancing to 59.7 from 56.1 in November. The December 2020 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI) is published by the Equipment Leasing & Finance Foundation.

The Foundation also released its latest Covid-19 Impact Survey, measuring the responses of 47 executives. Half of the respondents expect the default rate will be greater in 2020 than in 2019, down from 54 percent in November.

“Given the rising Covid rates, I would expect a temporary slowdown in activity in the short term,” said Impact Survey respondent Vincent Belcastro, Group Head Syndications, Element Fleet Management, an independent financing company. “Medium term, and depending on monetary and tax policy with the new Biden administration, could exhibit a downturn and short recession. I believe in the long term our industry will be strong with new technological and alternative asset types driving demand.”

MCI-EFI survey respondent Paul Tyczkowski, SVP finance, LEAF Commercial Capital Inc., said:

“While the Covid crisis continues to have significant impacts on businesses as we close out the year, there’s reason for cautious optimism now that the distribution of a highly effective vaccine is underway. Assuming distribution occurs as planned, I’m hopeful for a steady return to at least some level of normalcy in our lives and the economy during 2021.”

Some 27.6 percent of MCI-EFI respondents said their business conditions over the next four months will improve, up from 26.9 percent in November, and 10.3 percent said they believe business conditions will worsen, a decrease from 19.2 percent in November.

Demand for leases and loans to fund capital expenditures will increase over the next four months, according to 27.6 percent of respondents, up from 19.2 percent in November. Some 17.2 percent said they believe demand will decline, up from 11.5 percent in November.

None of the respondents evaluated the current U.S. economy as “excellent,” unchanged from the previous month, but 27.6 percent graded it as “poor,” up from 23.1 percent in November.

More than half, 55.2 percent, said that they believe that U.S. economic conditions will get “better” over the next six months, an increase from 34.6 percent in November. One in ten, 10.3 percent, said that they believe economic conditions will worsen over the next six months, down from 15.4 percent the previous month.

Source: ELFF