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August 15, 2012

More Companies Financed Equipment in 2011, Says PwC

PriceWaterhouseCoopers’ 2012 Survey of Equipment Finance Activity found that the equipment finance industry experienced significant growth over previous-year levels in 2011.

While equipment financing and leasing is improving in spite of broader economic setbacks, the trend could signal optimism from companies that had previously trimmed expenses to the bone in response to the economic crisis.

New business volume grew 16.5 percent in 2011 compared to just 3.9 percent in 2010. Middle-ticket items were the most substantial drivers of growth, followed by small-ticket financing and leases of less than $100,000 and then large-ticket segments.

In addition, the survey found that credit approvals had increased over 2010 levels. Seventy percent of credit applications were approved, and 50 percent of applications were both funded and booked.

The types of equipment financed were extremely varied, according to PwC. Businesses and individuals financed equipment for agriculture, construction, manufacturing and transportation. Computer equipment and furniture were also heavily financed during the past year.

“The 2012 SEFA data show the equipment finance sector continued to gain momentum as the economy improved in 2011,” said William Sutton, president and CEO of the Equipment Leasing and Finance Association (ELFA). “More recent data collected in 2012 indicate that steady growth is continuing, even amid a slow economic recovery.”

Last year’s levels of equipment financing followed a drop of 2.2 percent in 2008 and a plummet of 30.3 percent in 2009.

The survey provides comprehensive performance metrics for over 109 companies that finance or lease equipment. The companies are divided according to volume size, organization type, market segment and business model. Data includes balance sheets, residual experience, productivity measures, profitability data and financial ratios.

Overall, the equipment leasing and financing industry hauls in $628 million annually.

Some equipment segments did not demonstrate positive growth. PwC reported a decline in medical, mining, telecommunications and office equipment.

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Edited by Brooke Neuman

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