Equipment Leasing Outlook For 2019: What You Need To Know
At AvTech Capital, we recognize that the equipment leasing terrain is continuously changing and evolving. We also believe that it’s our job to remain ahead of the trend curve; we make it our mission to stay focused on what’s happening in our industry as well as understand how outside market variables may impact the way our partners leverage capital equipment leasing to grow their businesses.
Equipment Leasing Report Showcases Trends and Growth Opportunities
The recently released 2018 Equipment Leasing & Finance Industry Horizon Report has proven a valuable resource for the AvTech Capital team as we strive to best serve our clients across multiple verticals and specialties in 2019. This hybrid report aggregates key elements from the annual State of the Equipment Finance Industry Report (SEFI) with data collected from the four-year market sizing study to pinpoint essential industry performance from previous years as well as identify expected future opportunity and growth throughout the marketplace.
So, what does the 2018 Equipment Leasing & Finance Industry Horizon Report anticipate on the horizon for 2019? The report noted several emerging industry trends and potential risks, including:
Equipment Leasing Report Showcases Trends and Growth Opportunities
The recently released 2018 Equipment Leasing & Finance Industry Horizon Report has proven a valuable resource for the AvTech Capital team as we strive to best serve our clients across multiple verticals and specialties in 2019. This hybrid report aggregates key elements from the annual State of the Equipment Finance Industry Report (SEFI) with data collected from the four-year market sizing study to pinpoint essential industry performance from previous years as well as identify expected future opportunity and growth throughout the marketplace.
So, what does the 2018 Equipment Leasing & Finance Industry Horizon Report anticipate on the horizon for 2019? The report noted several emerging industry trends and potential risks, including:
Leasing Remains Preferred Financing Option
The data highlights something that AvTech Capital already knows: equipment leasing is the preferred financing option for business owners in multiple industries. The report’s end-user survey of private sector investments showed that leasing was, by far, the favored method of payment for companies acquiring capital assets and software:
- Leasing: 48%
- Lines of credit: 9%
- Secured loans 8%
The report also indicated that for non-financed acquisitions, cash was preferred by 23% of users surveyed, followed by paid-in-full credit card purchases at 10%, and “other” methods coming in at just 2% of all survey participants.
60% of Business Owners Finance Acquisitions
The end-user survey also revealed that an estimated 60% of participants who purchased software or equipment in 2017 utilized at least one form of financing (lease, a line of credit, secure loan) to make the acquisition; this result is lower than the 78% estimate previously released by the Foundation in 2016. The downturn could stem from several factors including rising interest rates that increase borrowing costs and an overall upswing in consumer confidence, which ignited an escalation in purchasing activities from smaller businesses.
Entrepreneurs Likely to Finance Growing Operations
According to survey respondents, 59% expect capital equipment and technology procurement to remain the same in the upcoming year. Still, more than twice as many entrepreneurs anticipate their purchases to increase (26%) vs. decrease (12%). Of those planning to make a significant machinery or software acquisition in the upcoming year, 67% expect to use cash to absorb at least some of the cost; however, 59% are likely to finance some or all of the expense, a sign of borrower confidence in financing stability.
Industry Shows Restraint on Risky Lending
Data taken from the Survey of Equipment Finance Activity (SEFA) showed that overall portfolio performance, while healthy, did indicate signs of compression throughout various types (most notably captives and independents). Additionally, throughout 2017, the equipment leasing industry demonstrated restraint on potentially risky financing and lending models to help sustain healthy yields across multiple metrics and lender types.
New Business Volume Up
Statistics from the Equipment Leasing and Finance Association’s (ELFA) annual Survey of Equipment Finance Activity showed that new business volume for the overall equipment finance industry increased by 6.9% in 2017; a robust surge when compared to 2016’s more modest 2.5%.
Economic Outlook Remains Optimistic
Yes, the U.S. economy is swiftly approaching the longest stretch of growth to date. However, the economic outlook still remains optimistic. Many common indicators and warning signs of a financial downturn imply that our current expansion will likely continue for at least the next several months to a full year.
Entrepreneurs Must Adapt to Changing Technologies
Artificial intelligence and machine learning are changing (and challenging) the equipment finance industry. Business owners looking to edge out the competition will not only need to embrace the latest innovation advances and deploy new systems throughout their organization but also hire and develop internal staff prepared to optimized technology opportunities.
Is your business ready to expand in 2019? AvTech Capital creates customized equipment financing solutions for enterprises with every need and across multiple industries. Contact us for a no-risk consultation with one of our experienced specialists today.
