About the Market
The equipment financing / equipment leasing industry facilitates the growth and expansion of the U.S. economy by providing multiple financing products for companies to acquire and employ plant, equipment and software, thereby enhancing business investment and capital formation. The equipment finance sector is comprised of financial services companies and manufacturers, regional and community banks, and independent small and medium sized finance companies. An important contribution of the industry lies in providing access to capital because equipment acquisition and utilization impacts goods-producing and service-providing industries - virtually all sectors of the economy.
Below are some interesting statistics which provide a detailed overview of the size of the market, what industries routinely lease / finance equipment, popular equipment types for leasing / financing, volume by state and some of the most common reasons that businesses choose to lease or finance their capital equipment.
US Equipment finance market study:
- Lease volume $186 billion
- Lease + term loan is $285 billion
Industry & business sizes
- Companies in business for 10+ years account for the majority of equipment finance fundings (not approval requests but actual fundings).
- Service industry represents nearly 50% of all small ticket (under $250K) leasing / financing transactions – by number of transactions funded.
- South Atlantic (Delaware to Florida) has a higher than average propensity to lease / finance their equipment acquisitions.
Small ticket new business volume by equipment type
- Office machines
- Agricultural equipment
- Construction equipment
- Computer workstations
- Medical equipment
- Trucks / Trailers
- Material handling equipment
- Computer mainframes / servers
- Computer software
- Office furniture
Equipment finance markets – top 10 states by total $ amount financed
1. CA
2. TX
3. NY
4. FL
5. IL
6. PA
7. OH
8. NJ
9. NC
10. GA |
$72.8 billion (12% of the US market)
$53.5 billion
$37.3 billion
$33.2 billion
$23.8 billion
$22.8 billion
$20.3 billion
$19.2 billion
$19.2 billion
$18.8 billion |
Top 3 motivators to finance
The motivators are consistent throughout all ticket sizes; however, obsolescence avoidance increases slightly as the ticket size increases.
- Cash flow optimization
- Tax advantages
- Avoid obsolescence
Because equipment leases provide some of the most flexible commercial financing terms available today many financial experts agree that equipment finance firms will spark the commercial lending turnaround in 2010 and beyond. |
