US equipment finance demand surges on AI investment

US equipment finance new business volumes surged to a record high in July, driven by investment linked to artificial intelligence, according to the latest Equipment Leasing & Finance Association (ELFA) data.

ELFA’s CapEx Finance Index (CFI) reported seasonally adjusted new business volume (NBV) of $14.3 billion in July, up 34.3% from June and $2.8 billion – or 24.5% – above the previous all-time monthly high.

Year-to-date new business volume was 16.8% higher than during the same period in 2025, while non-seasonally adjusted volume increased 47.3% year-on-year.

The strong July performance has pushed ELFA’s full-year forecast for 2026 new business volume to $137.3 billion, which would be the highest annual total recorded and 14% above the previous record set in 2024.

“This is the second time this year that the pace of monthly new volumes has set a new record. Credit quality improved as well, with the average loss rate at a nine-month low and delinquencies holding near the low end of their two-year range.”

Small-ticket volumes hit record

Small-ticket financing recorded particularly strong growth during July, with deal volumes reaching $6.4 billion, an increase of 84.5% and the highest monthly level recorded.

Year-to-date small-ticket activity was 25.9% ahead of the equivalent period in 2025.

Performance varied between lender types. Banks recorded $5.4 billion of new activity, down 1.3% from June but still their third-highest monthly total of the year.

New business at independent finance providers increased 5%, reaching its strongest level since February, while activity among captive finance companies surged 94.1%.

Credit approval rates, meanwhile, fell by 2.1 percentage points to 77.4%. However, ELFA said almost all of the decline was attributable to a relatively small proportion of respondents, with approval rates across the remainder of the survey panel broadly unchanged.

The average small-ticket approval rate declined by one percentage point to 79.7%.

Credit performance remains resilient

Credit quality remained relatively strong despite a slight increase in delinquencies.

The overall delinquency rate edged up from 1.7% in June to 1.8% in July, but remained towards the lower end of its two-year range and approximately 0.2 percentage points below its level a year earlier.

The overall loss rate fell by 0.08 percentage points to 0.46%, its lowest level in nine months.

Banks recorded an average loss rate of 0.30%, their lowest reading since January 2023, while losses among independent finance providers also declined.

The latest volume figures come as industry confidence remains relatively high. ELFA’s Monthly Confidence Index eased from 63.7 in July to 62.4 in August, with all respondents expecting capital expenditure financing demand to either remain at current levels or increase.

ELFA said the combination of strong demand and healthy credit conditions leaves the equipment finance industry on course for a record year, although higher funding costs could present a greater risk during the second half of 2026.

Lytle added: “With unrelenting demand and healthy financial conditions, it’s going to take a lot more than recent market volatility or a few Fed rate hikes to keep the industry from breaking records in 2026.”