2025 Predictions in Equipment Finance

 

ELFA Reveals Game-Changing 2025 Predictions in Equipment Finance

JAN 16, 2025 - 5:58 am

The Equipment Leasing and Finance Association (ELFA) unveiled its 2025 equipment finance industry predictions. These insights highlight the trends, challenges and opportunities shaping the industry in the year ahead.

“As we look toward 2025, the equipment finance industry continues to play a pivotal role in driving innovation, sustainability, and economic growth,” Leigh Lytle, president and CEO of ELFA, said. “From advancing clean energy investments to leveraging AI and digital transformation, our predictions reflect how the industry is evolving to meet new demands and seize emerging opportunities.”

Key Predictions for 2025

• Focus on Reshoring and Domestic Manufacturing: As supply chain resilience remains a priority, equipment finance will play a key role in enabling the reshoring of manufacturing and investment in advanced production technologies.
• Interest Rate Sensitivity Drives Innovation: In a high-interest-rate environment, companies will explore flexible financing options like leasing and pay-per-use models to preserve capital and adapt to economic fluctuations.
• Expansion of Equipment-as-a-Service (EaaS): The rise of subscription-based and usage-driven financing models will continue, offering businesses more flexibility and alignment with operational needs.
• AI and Data Analytics Redefine Decision-Making: Equipment finance companies will increasingly adopt artificial intelligence and predictive analytics to enhance underwriting processes, assess risks and optimize customer experiences.
• Sustainable Financing Gains Momentum: The growing focus on sustainability is driving increased demand for financing solutions that support energy-efficient equipment, renewable energy projects and advancements in transportation technologies.
• Cybersecurity Becomes a Top Priority: As connected and IoT-enabled equipment becomes more prevalent, equipment finance providers will emphasize cybersecurity measures to protect customer data and assets.

U.S. economy will grow by 2.7%.

 

ELFF Industry Snapshot: U.S. Economy Projected to Grow by 2.7%

JAN 7, 2025 - 5:56 am

The Equipment Leasing & Finance Foundation released the 2025 Equipment Leasing & Finance Industry Snapshot, which summarizes the current conditions and projections for the U.S. economy and equipment finance industry.

Among the wide range of details in the Q1 2025 Snapshot:

• The foundation projects that the U.S. economy will grow by 2.7%.
• The U.S. economy expanded at 2.8% (SAAR) in Q3/24, a slight decrease from 3.0% growth in Q2/24.
• Three key factors boosted the U.S. economy in 2024 and set the stage for continued economic growth in 2025: a strong labor market, rising household wealth and resilient consumer spending.
• Economic tailwinds:
  • Q3/24 growth was primarily driven by consumer spending, supported by a boost in government spending and business investment.
  • Economic headwinds include negative growth in private inventories, residential investment and net exports.
  • Equipment and software investment is expected to grow at a 4.7% annualized pace in 2025.
  • Equipment and software investment expanded 7.5% in Q3/24 (annualized) after growing 7% in Q2/24. Growth was positive in seven of 12 tracked verticals.
  • Moderate growth is expected during the first half of the year with upside potential later in the year if inflation cools further toward 2%, and the Fed responds by further lowering interest rates.
• By equipment type:
  • Six of 12 verticals are exhibiting recent momentum that is stronger than historical norms, including computers and mining & oilfield machinery.
  • Investment growth in other industrial equipment and trucks appears set to shrink in the coming six months.
  • New business volume growth reported in ELFA’s CapEx Finance Index (formerly the MLFI-25) in October was up 11.9% Y/Y, 5.1% M/M, and up 3.7% YTD, outpacing the rate of inflation.
• Special Topic – Trump’s Second Term, An overview of three key policy areas in the new administration:
  • Tariffs: As an economic strategy, economic consequences and retaliation and uncertainty and opportunities
  • Taxes: The 2017 Tax Cuts and Jobs Act, impact of new legislation on investment and potential long-term implications
  • Industrial Policy: Policy priorities are likely to shift regarding renewable energy, domestic manufacturing and infrastructure development projects, with the effect on equipment demand unclear.