US equipment finance demand remains strong despite August slowdown

US equipment finance demand eased from July’s record high in August but remained at historically strong levels, with new business volume reaching $11.8 billion, according to the latest Equipment Leasing & Finance Association (ELFA) CapEx Finance Index.

Seasonally adjusted new business volume (NBV) fell 17.3% from July’s record $14.3 billion but still represented the second-highest monthly total since the survey began.

On a non-seasonally adjusted basis, August volume was 19.1% higher than a year earlier, while year-to-date activity was up 17.3% compared with the same period in 2025.

ELFA now forecasts equipment deal volume of $137.7 billion for 2026, which would be the highest annual level since the survey began in 2006 and 14.4% above the previous record set in 2024.

James Cress, Acting President & CEO of ELFA, said: “Cooler demand in August was unsurprising given the strength of demand in July. July’s volume was nearly 25% above the previous all-time monthly high due to a surge in AI spending.

“August was still the second strongest month ever, further validating our forecast that 2026 will be, by far, the best year ever for new deal volumes.”

Bank activity reaches record high

Small-ticket deal volume totalled $4.2 billion in August, down 34.5% from July’s record level. Despite the decline, August was tied for the fifth-highest month on record and remained 10.9% above the average monthly pace during the 12 months to June.

Year-to-date small-ticket activity was 25.9% higher than during the equivalent period in 2025.

Banks recorded an all-time high of $6 billion in new business volume, an increase of 9.7% from July and above the previous record set in March 2022.

Captive activity fell 37.2% to $3.6 billion following July’s surge but remained above its average monthly pace during the 12 months to June. Independents recorded $2.2 billion, down 1.2% from July.

Credit losses fall to ten-month low

Financial conditions improved during August, although the industry-wide credit approval rate declined for a second consecutive month.

The average approval rate fell two percentage points to 75.4%, its lowest level since February 2025, while the small-ticket approval rate decreased 1.5 percentage points to 78.2%.

The overall delinquency rate remained unchanged at 1.8%, close to the bottom of its two-year range and 0.4 percentage points lower than a year earlier.

Losses also improved, with the overall loss rate falling 0.02 percentage points to 0.44%, its lowest level in ten months. Small-ticket losses declined 0.08 percentage points to 0.65%, while the rate among banks fell to 0.28%, its lowest since January 2023.

Cress said: “Credit quality improved as well, with the average loss rate falling to its lowest level in ten months and delinquencies holding near the low end of their two-year range.

“Higher borrowing costs from additional Fed hikes would put modest upward pressure on delinquencies and losses, but with credit quality this healthy, the industry would face some chop rather than a full-blown storm.”

Industry confidence remained unchanged in September, with ELFA’s Monthly Confidence Index standing at 62.4.

Mike Janse, General Manager – U.S. at DLL, said: “Over the past quarter, many of our partners and customers have been impacted by various means of uncertainty, geopolitical developments and continued pressure to manage costs in a changing economic environment.

“Amid these headwinds, businesses recognize the need to modernize equipment and invest in technology that drives productivity and resilience.

“Looking ahead, interest rate trends, regulatory developments and overall business confidence will play an important role in asset finance demand, but we expect our partners and customers to remain focused on strategic investments that support long-term performance.”