Weak Economy Strengthens Equipment Leasing

Compiled ByDeborah Austin The $244 billion U.S. equipment leasing industry may be the silver lining in the tight economy, suggests the 2002 Survey of Industry Activity by the Equipment Leasing Association (ELA), Arlington, Va. In 2001, the industry grew 1.6% in new-business volume, which reached an estimated $114.6 billion. Overall, more than 97% of average receivables were current -- a healthy level, says Ralph Petta, ELA vice president of industry services. Traditionally, equipment leasing thrives in uncertain economies because it offers more flexibility than ownership, Petta says. And when capital is tight, companies often can lease needed equipment without a down payment -- using monthly payments that let them "match productive use of the equipment with the cash flow of the business." Much of 2001's new-business volume (35%) was in the large-ticket market segment (transactions of more than $5 million). At 15% of the total, computer hardware equipment represented the highest dollar volume of new-business originations. The top three end-user industries representing new-business volume were construction, industrial/manufacturing and agriculture/forestry/fishing, the ELA reports.