Equipment Leasing Continues to Grow

Equipment financing and leasing was used to acquire almost $600 billion worth of equipment last year or almost 55% of all fixed assets acquired by businesses.

At a time when most borrowers and lenders were focused on closing year end deals and holiday parties, the Equipment Leasing and Finance Association released its 2007-2008 U.S. Equipment Finance Study which describes in detail how popular this funding mechanism has become to businesses large and small.

I'll let you read the entire report if you choose - here's what I found interesting.

• The $600 billion estimate is triple the amount reported by lender surveys. That's a pretty big margin of error!
• Equipment finance is somewhat concentrated geographically with the top five states representing 37 percent of the national market. California leads all states in the use of equipment finance, at $72.8 billion or 12 percent of the U.S. market. Texas, New York, Florida and Illinois round out the top five states.
• One of the major factors to influence equipment financing methods is firm size. Small businesses are much more likely to finance equipment acquisitions out of available funds or cash and much less likely to utilize leases or term loans. Within the small business segment the dominant form of financing is through a line of credit, which includes the utilization of revolving balances available on credit cards.

Hopefully, this last point does not mean that small business is making the classic mistake of financing long term assets with short term money! Who am I kidding? I see that all the time!

For small businesses with a reasonably strong credit profile, there is a large number of leasing companies able to provide lease financing for amounts up to $100 thousand on the basis of a one page application. These "app only" financings are available for a wide variety of industries and equipment types. The largest "app only" program I have seen is for an amount of $250 thousand.

Need help finding the right equipment leasing company? Read "Matchmaking for Business Loans" and give me a call!

Tags : Equipment leasing , leasing , app only , equipment finance