U.S. businesses and government agencies will finance more than $742 billion in equipment acquisitions in 2013, according to the U.S. Equipment Finance Market Study 2012-2013. The study, released by the Equipment Leasing & Finance Foundation, Washington, D.C, was conducted by IHS.
Key findings of the report include:
- Even with the relatively high degree of uncertainty over the economy and regulations/fiscal policy, nearly 30% of companies surveyed anticipated increasing their equipment investment over the next 12 months. This group of companies is disproportionately represented by large companies. For example, among companies with sales over $100 million, 51 percent indicated they would increase spending, yet only 17 percent of businesses with sales less than $1 million had similar plans.
- In 2012, equipment finance volume returned to pre-recession levels, with the 2012 estimate for the equipment finance market expected to reach $725 billion. The market is expected to expand over the next two years; however, the growth rate is expected to slow.
- The equipment finance sector is a significant contributor to capital formation in the U.S. economy. Of the projected $1.3 trillion invested in plant, equipment and software in 2013, 55 percent, or $742 billion, of that investment is expected to be financed through loans, leases and lines of credit. In 2014, the market size is projected to grow to $778 billion.
- Seventy-two percent of companies use some form of financing when acquiring equipment, including loans, leases and lines of credit (excluding credit cards). Companies with less than $1 million in revenues use financing in 49 percent of the equipment acquisitions. Companies with revenues between $25 million and $100 million use financing in 86 percent of their acquisitions.
- Companies with sales between $25 million and $100 million doubled their share of financing volume from 2006 to 2011. Companies with fewer than 51 employees also doubled their share equipment acquisition via financing in this time period.
- Corporate perceptions of the economic outlook are the primary driver behind equipment investment decisions. When presented with a list of potential factors that will drive future investment spending, companies surveyed by the Foundation overwhelmingly chose “general economic conditions.” The financing decisions of smaller companies are especially sensitive to general economic conditions.
To learn more, visit the association's website.