Equipment Loans Show Spring Surge

Loans and credit lines for new business equipment increased 45 percent between February and March, as companies prepare for the spring and summer months. The confidence indices for both equipment lenders and homebuilders have dipped in recent months, however, as the economy maintains a sluggish pace.

Companies signed up for $6.8 billion in new loans, leases and lines of credit for new equipment in March, up 45 percent from February, the Equipment Leasing and Finance Association (ELFA) said April 23. New business levels were flat, however, compared with a year earlier.

"The continued low interest rate environment promoted by the Federal Reserve with relatively benign fundamentals in the broader economy bode well for businesses planning to expand and grow in the coming months and invest in capital equipment," ELFA chief executive William Sutton said in a statement.

The financing is used to buy goods such as commercial landscape and construction equipment, computer systems and office furniture. Washington-based ELFA, a trade association with more than 575 members that reports economic activity for the $725 billion equipment finance sector, said credit approvals totaled 78.4 percent in March, up 1 percent from February.

ELFA's leasing and finance index measures the volume of commercial equipment financed in the United States, based on a survey of 25 members that include and the financing affiliates or subsidiaries of Caterpillar Inc., Deere & Co and Bank of America.

ELFA's non-profit affiliate said its April confidence index fell to 54 from 58 last month, reflecting continuing concerns over the economy and the impact of federal policies on capital expenditures. The National Association of Home Builders also reported a decline in its member confidence index in April, dropping two points to 42 and reaching its lowest level since October. Both indexes score on a scale where readings below 50 indicate a generally negative view of the market.