US equipment financing is expected to increase this year as business investment is said to reach all-time high, according to The Equipment Leasing and Finance Association (ELFA).
US businesses, non-profit organisations and government agencies are projected to spend a record $1.484tn in capital goods and fixed business investment (including software) this year.
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ELFA, which represents the $903bn equipment finance sector, forecasts that 62% ($922bn) of the investment in plant, equipment and software will be financed through loans, leases and lines of credit. Additionally the association predicts that seven out of ten businesses will use at least one form of financing to acquire equipment.
Investment will not be solely for replacing aging assets, but also for expansion. Industries poised for investment growth include oil and gas extraction as well as transport equipment manufacturing.
Aircraft, trucks and other industrial equipment are projected to be among the higher growth types, while agriculture, computers and software are expected to see slower growth.
ELFA President and chief executive William G. Sutton, CAE, said: "Equipment financing is a critical source of funding for a majority of U.S. businesses, allowing them to acquire the equipment they need to operate and grow. It enables equipment acquisition, which plays a critical role in driving the supply chains across all U.S. manufacturing and service sectors."
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By GlobalDataThe report suggests that the improving economy in association with favourable credit conditions, will benefit businesses planning to finance equipment replacement and expansion.
Nontraditional financing such as investment banks, venture capitalists and crowd funders are cited as important vehicles in the equipment finance industry. ELFA projects that they will play a greater role in the industry throughout this year.
