Equipment finance activity rebounded in February following recent volatility, according to data released by the Equipment Leasing and Finance Association (ELFA).
Seasonally adjusted new business volume totaled $9.7 billion, up 3.7% from January. However, year-to-date volume was down 3.7% compared to the same period in 2024, and February’s year-over-year volume dropped 7.4% on a non-seasonally adjusted basis.
“The latest CFI release showed a return to normalcy in February,” said Leigh Lytle, ELFA President and CEO. “Demand for equipment returned to healthy levels after whipsawing the last few months due to a historic swing in financing activity at banks. Financial conditions weakened a little as losses rose, but accounts past 30 days remained low, and new applications remained strong. 2025 is shaping up to be bumpy, but so far, the data indicates that demand for investment equipment has weathered the storm. We’re closely watching financial conditions for signs of erosion, but we expect the industry to have a solid year as long as the economy avoids a recession.”
New Business Volumes Rebound
Volumes increased on a seasonally adjusted basis, posting a similar level of new business activity as the previous two February reports. Activity grew at banks and captives, with new business volumes expanding month-over-month by 0.9% and 15.0%, respectively. Financing at independents dropped by 6.4% after growing by 8.6% in the previous month. Despite the cooling, financing activity at independents has gained ground over the last five years. From 2017 to 2019, independents comprised roughly 16% of all new business activity. That number jumped to 20% of all activity from January 2024 through February 2025. The share of activity at captives also increased by around 2.25 percentage points, while bank activity fell by almost 7.5 percentage points.
Pace of Job Losses Slow
After picking up speed for three months, the pace of job losses slowed in February. The sector was still down 2.4% over the last 12 months, mainly driven by a 6.4% contraction in employment at captives. Banks also experienced a 1.6% loss in headcount over the last year, while independents saw employment rise by 1.0%.
Credit Approvals Hover at 75%
Credit approvals continue to hover around 75%. The average credit approval rate dropped to 75.4%, a decline of roughly half a percentage point. However, the rate remains well above the levels seen at the end of 2024.
Financial Conditions Somewhat Weakened
Aging receivables over 30 days dropped back down to 2.0%, a decline of 0.2 percentage points. However, charge-offs (losses) rose to 0.55%, the second-highest level in the last two years. The increase in losses was driven by a rise in charge-offs at independents and banks. While the average loss rate rose, the loss rate for small ticket activity dropped after a notable jump in the prior month.
“KeyBank remains optimistic as credit quality continues well within historical norms, capital is abundant and the desire for earning assets is strong,” said Peter Bullen, executive vice president and group head at Key Equipment Finance. “We are also encouraged to see a significant rebound from Key Equipment Finance clients in equipment financing demand compared to last year at this time. At the same time, we remain vigilant of the potential impact of new tariffs and general economic uncertainty on capital spending.”
Industry Confidence Drops
Industry sentiment declined slightly. The Equipment Leasing & Finance Foundation’s Monthly Confidence Index dropped to 58.1 in March, as executives grew more cautious about business conditions over the next four months.
About ELFA’s CFI
ELFA’s CapEx Finance Index is a near-real-time measure of commercial equipment financed in the U.S., released monthly ahead of the Commerce Department’s durable goods report. It reflects business activity from a survey of industry participants across banks, captives and independents.
