Survey: US March Equipment Financing Up 44% Over Last Year

Financing volume for business equipment rose 44% in March from a year ago, as capital equipment purchasing continued to gain momentum in an improving U.S. economy, according to a monthly survey of banks and finance companies released Monday.

Respondents to the Equipment Leasing and Finance Association's survey said they financed $6.2 billion of new equipment last month, compared with $4.3 billion a year earlier. March's volume was up from the $4.1 billion notched in February. The $521 billion-a-year commercial leasing and financing industry has been steadily recovering after the U.S. economic recession and limited access to credit sent the industry into a tailspin in 2009. From January through March, survey respondents provided financing for $10.8 billion of equipment purchases, up 34.5% from the same period in 2010.

"The dramatic increase in new business volume is, in large measure, the result of strong demand in business equipment in various industries and markets, said William Sutton, president of the Washington-based leasing and finance association. "We see this trend continuing."

Seventy-seven percent of the loan applications submitted during March were approved, up from 68% a year earlier and up one percentage point from February. The year-over-year improvement reflects easing credit standards as lenders displayed improved confidence in loan applicants' business outlooks.

Credit quality indicators in the survey remained mixed, as the lingering effects of bad loans and tenuous credit of some loan recipients continue to be an overhang for the financing industry.

Loans and leases past due by more than 30 days amounted to 3.5% of respondents' net receivables last month. While that's up slightly from February's 3.1%, it's down from 4.2% in March 2010.

Loan charge-offs amounted to 1.3% of respondents' net receivables in March, down from 1.5% last year, but up from the 1% reported in February. Survey respondents continued to cite construction and trucking as industry sectors within their loan portfolios that are under-performing.

The 25 respondents to the Washington association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB); independent financing companies including CIT Group Inc. (CIT); and finance units for manufacturers Caterpillar Inc. (CAT), Deere & Co. (DE), Volvo Group, and Dell Inc. (DELL).

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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