Equipment finance activity showed remarkable resilience in March, climbing 8% year-over-year despite mounting economic pressures. Industry experts attribute this unexpected growth to strategic investments across multiple sectors preparing for anticipated infrastructure projects.
The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index revealed that new business volume reached $10.3 billion last month. This represents not only a year-over-year increase but also a substantial 39% jump from February figures. The data surprised many analysts who had predicted more cautious spending amid persistent inflation concerns and elevated interest rates.
“Companies are making calculated equipment investments now to position themselves for the coming wave of infrastructure spending,” said Maria Gonzalez, chief economist at Capital Equipment Partners. “They’re essentially betting that the Federal Reserve will begin easing monetary policy later this year, making this an optimal window for major acquisitions.”
The construction and transportation sectors led this growth surge, with particularly strong demand for earth-moving equipment, commercial vehicles, and specialized machinery. Manufacturing technology also saw significant financing activity as businesses prioritize automation to address ongoing labor challenges.
Financial health indicators within the report painted a more complex picture. The percentage of receivables over 30 days increased to 2.1%, up from 1.9% the previous month and 1.8% last year. Charge-offs edged upward to 0.4% but remained below the pre-pandemic average of 0.5%. These metrics hint at emerging financial strain despite the robust equipment investment activity.
Industry veterans note this seemingly contradictory trend may signal strategic decision-making rather than recklessness. Businesses appear willing to accept shorter-term financial pressure to secure capacity ahead of anticipated economic improvements.
“Equipment financing represents a forward-looking indicator,” explained Robert Chen, equipment finance specialist at Regional Banking Solutions. “Current data suggests businesses are focused on positioning for recovery rather than reacting to today’s challenges.”
The surge comes amid other mixed economic signals. The Federal Reserve’s latest Beige Book indicated modest economic growth alongside persistent inflation pressures. Manufacturing activity has strengthened in recent months according to Institute for Supply Management data, but consumer sentiment remains subdued.
Portfolio yields in the equipment finance sector increased to 9.81% in March, up significantly from 9.08% a year earlier. This reflects the cumulative impact of interest rate hikes that have reshaped financing costs. Despite higher borrowing expenses, businesses appear unwilling to delay critical equipment upgrades.
Regional variations in equipment finance activity were noteworthy. The Midwest showed particular strength, with financing volume up nearly 12% compared to last year. Western states followed at 9% growth, while southeastern markets recorded more modest 5% increases.
Credit approval rates declined slightly to 75.3% of applications, down from 76.1% in February. This suggests lenders are exercising greater scrutiny in their underwriting processes even as overall business volume expands. The competitive environment remains intense with banks, captive finance companies, and independent lenders all actively pursuing deals.
The technology subsector showed particularly interesting trends. Financing for IT equipment, including servers, data storage, and networking infrastructure, grew 14% year-over-year. This reflects ongoing digital transformation initiatives across industries and increased investment in cybersecurity capabilities.
Employment in the equipment finance industry remained stable with a 0.2% increase in headcount. Companies report difficulty filling specialized roles in risk assessment, digital analytics, and sustainable finance – areas experiencing growing demand as the industry evolves.
“The talent gap represents one of our biggest challenges,” noted Jennifer Taylor, president of the Equipment Finance Association. “We’re seeing increased competition for professionals who understand both equipment applications and complex financing structures.”
Looking ahead, industry forecasters maintain cautious optimism
