US equipment finance remains on track for record year despite cooling demand

The US equipment finance industry remains on course for a record year despite a moderation in demand, according to the latest CapEx Finance Index (CFI) published by the Equipment Leasing & Finance Association (ELFA).

The May index showed new business volumes (NBV) totalled $10.2 billion on a seasonally adjusted basis. While this represented a 2.3% decline from April and marked the fourth consecutive month of easing demand, activity remained above the 2025 monthly average of $10 billion.

Year-to-date, new business volumes are 11.5% higher than the same period in 2025, although May volumes were 7.7% lower than a year earlier on a non-seasonally adjusted basis.

ELFA forecasts total equipment finance demand will reach $128 billion in 2026, the highest annual level recorded since the survey began in 2006.

“We’re still headed for the strongest year on record, and I expect demand to remain solid over the second half of the year. Delinquencies picked up, but continue to hover in a narrow band, and the average loss rate fell for a second consecutive month. Our data continue to point to healthy financial conditions in the industry, which will continue to serve as a buffer should we encounter additional surprises in 2026.”

The report found that demand remained resilient across market segments. Small-ticket finance volumes totalled $3.5 billion, down 1.3% from April but almost 30% higher than the same period last year. Activity among bank-owned finance providers remained above its six-month average despite easing from April’s strong performance, while independent finance companies recorded 2.1% growth in new business. Captive finance providers experienced a 3.7% decline in activity.

Credit conditions also strengthened during the month. The industry-wide approval rate rose to 79.0% in May, the highest level since December 2021. Approval rates increased significantly among banks and independent finance companies, although they declined slightly in the small-ticket and captive finance segments.

Credit performance remained stable despite a modest increase in arrears. The overall delinquency rate rose to 2.1%, remaining within the narrow range seen throughout 2026, while the average loss rate fell for a second consecutive month to 0.49%. Loss rates also declined across both captive and independent finance providers.

Industry confidence also improved, with ELFA’s Monthly Confidence Index rising to 63.7 in June from 59.9 in May, marking its second consecutive monthly increase.

Linda Redding, Managing Director and Head of Equipment Finance at J.P. Morgan, said: “Underlying equipment demand remains resilient, though clients are taking a more measured, deliberate approach as higher interest rates and ongoing macro and geopolitical uncertainty weigh on decision making and extend deal timelines.

“Inflation expectations and policy-related factors, such as tariffs and regulatory changes, also continue to influence project economics in many sectors. Increasingly, our clients are seeking out industry experts and research to help guide timing and structure to ensure they are accounting for all possible variables prior to execution. Looking through year-end, we expect activity to remain steady, supported by replacement-driven purchases and selective growth investments that can generate clear returns.”

ELFA noted that although inflation has edged higher and the US Federal Reserve has shown little appetite for interest rate cuts this year, industry financial conditions remain resilient. The association added that easing geopolitical tensions in the Middle East could provide a further boost to equipment demand and financing activity during the second half of 2026.