U.S. capex financing fell, but data offers hope

By James B. Kelleher

CHICAGO (Reuters) - The number of loans, leases and lines of credit written by lenders that finance half of the capital equipment investment in the United States shrank again in April as the economic downturn discouraged business borrowing.

But the lenders' trade group, the Equipment Leasing and Finance Association, also told Reuters that delinquencies and charge-offs declined in April, suggesting the stress among customers "may have crested."

ELFA said on Tuesday its capex financing index, which measures the overall volume of financings used to fund equipment acquisitions, fell 42.5 percent year-over-year in April to $4.1 billion, from $4.7 billion in March and $7.1 billion last year.

The group said the percentage of borrowers delinquent 30 days or more on their capex financings fell to 4 percent in April, from a revised 4.9 percent in March. And charge-offs as a percentage of all receivables fell to 1.79 percent in April, from 2.21 percent in March.

In another sign of a possible turnaround for the industry, employment at the companies that specialize in capex financings rose slightly in April, with total headcount up 2.9 percent.

"Tight credit and the recession continue to impede new business volume," said ELFA President Kenneth Bentsen. "However, deterioration of portfolio quality, in terms of delinquencies and charge-offs, may have crested."

Fifty-five percent of the $1.1 trillion invested in plant, equipment and software in 2006 was financed through loans, leases and lines of credit from the companies represented by ELFA, according to a 2007 study by Global Insight.

(Editing by Steve Orlofsky)