According to industry group Equipment Leasing and fund Association (ELFA) on Monday, U.S. corporations borrowed 8% less in October than they did a year earlier to fund equipment investments as certain businesses were negatively impacted by high interest rates.
The Washington-based ELFA surveys banks such as Bank of America and financing affiliates of equipment manufacturers including Caterpillar, Dell Technologies DELL.N, Siemens AG, Canon Inc., and Volvo AB, and reports on the economic activity for the over $1 trillion equipment finance industry.
Participants indicate modest increases in losses and delinquencies despite a set of solid economic indicators in the United States’, ELFA CEO Ralph Petta stated.
“This softness in credit quality is indicative of the challenges experienced by some businesses as they operate in a higher interest rate environment, constrained in some sectors, at least, by reports of a pull-back in bank lending,” Petta stated.
Dennis Bolton, Head of North America Equipment Finance at Gordon Brothers, stated, “The trends are consistent with the economic environment and market turmoil resulting from quantitative tightening, inflation, employment, and supply chain disruption.”
According to ELFA, US businesses applied for new loans, leases, and credit lines totaling $10.4 billion in October, up from $9.7 billion in the previous month.
Monthly improvements were also observed in credit approvals, which increased from 73.6% in September to 76% in October.
The non-profit branch of ELFA, the Equipment Leasing & Finance Foundation, reported that its confidence index increased from 40.1 in October to 42.8 in November. A reading over 50 denotes a promising future for business. (Editing by Tasim Zahid; reporting by Aatreyee Dasgupta in Bengaluru)