Application Approval Rate Increases
Annual Survey Shows 10 Percent Increase In Business Booked Or Funded And Brokered
October 3, 2002—Arlington, Virginia—The Equipment Leasing Association’s (ELA) 2002 Survey of Industry Activity (SIA) report results reveal that 71 percent of commercial lease applications submitted in 2001 were approved, with 54 percent booked and funded or brokered. Comparatively, in 2000, lessors reported 68 percent of applications submitted were approved and 44 percent was booked and funded or brokered.
The annual SIA provides a comprehensive look at the leasing and finance industry and tracks major performance measures for leasing and finance operations. “The survey results demonstrate that equipment lessors continue to strive to service businesses needs for equipment finance,” said Michael Fleming, ELA president. “A 10 percent increase in bookings or funding is significant. At the same time, while approval rates are up, delinquency and write-offs remain extremely low and steady.”
According to survey results, the 2001 average write-off is just 0.8 percent of the average net lease receivables balance and more than 97 percent of average receivables were current (less than 30 days). In 2000, 96.3 percent of average lease receivables were current and the average write-off was 0.7 percent.
Other ELA 2002 survey results highlights:
*27 percent of leases were renewed by the original lessee.
*The most widely used remarketing method to dispose of equipment at the end of the initial lease term was equipment purchased by the original lessee at 54 percent.
*The industry as measured by survey respondent activity grew to $114.6 billion in new business volume versus $112.7 billion in the previous year, a 1.6 percent increase.
*Industry ROA was 1.6 percent in 2001 (down a shade from 1.7 percent in 2000) and ROE was 13.7 percent (down from 14.7 percent).
ELA survey results were compiled from responses from 134 companies in one of four market segments that were determined based on the typical transaction size of a majority of their lease volume. The 2002 survey participation rate was significantly higher than in recent years, and the mix of respondents varied to a greater degree from past surveys. The four market segments include: micro-ticket (transactions less than $25,000), small ticket (transactions between $25,000 and $250,000), middle market (transactions between $250,000 and $5 million) and large ticket (transactions greater than $5 million). In addition, the data is analyzed and presented by the category of respondent organization: bank, independent or captive, and specific industry sector such as: transportation, agriculture, computers, furniture, medical, and telecommunications.
. For more information on the leasing industry, visit ELA online at http://www.elaonline.com or check out ELA’s informational portal for financial decision-makers at http://www.leaseassistant.org.
Organized in 1961, the Equipment Leasing Association (ELA) is a non-profit association representing companies involved in the dynamic equipment leasing and finance industry. ELA's mission is to promote the leasing industry as a major source of funds for capital investment in the United States and abroad. ELA maintains an informational portal for financial decision-makers at http://www.leaseassistant.org. Headquartered in Arlington, Va., ELA has more than 800 member companies and a staff of 27 professionals. Equipment leasing is estimated to be a $244 billion industry in 2002. Visit ELA online at http://www.elaonline.com.