By Bob Tita
Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- The volume of business equipment financed in September fell 31% from a year ago, while delinquent loans and leases rose 60%, according to the Equipment Leasing and Finance Association's monthly survey of 25 major banks and financing companies.
New equipment financed by the survey's respondents totaled $4.7 billion in September, compared with $6.8 billion in September 2008. The September volume was 27% higher than in August. But the association attributed the drop in August to seasonal factors, noting that September's volume was consistent with new financing levels for July and June.
"We're starting to see a little improved picture at least in terms of new business volume," Ralph Petta, interim president of the Washington, D.C.-trade group for the equipment financing industry, said Friday. "It looks like demand for capital goods is starting to pick up."
Commercial equipment financing is a $650 billion-a-year industry and a barometer of durable equipment investment activity by businesses.
The September survey continued to show plenty of troubling indicators for equipment demand. Survey respondents said loans and leases past due by more than 30 days increased to 5.6% of net receivables in September, up 60% from a year ago. Loan write-offs more than doubled from a year ago to 3% of net receivables, although the association attributed the spike to the deteriorating credit quality of two respondents, which were not identified.
Sixty-three percent of the survey participants said they had fewer transactions in September than a year earlier because of lower demand for equipment and tighter underwriting standards that have made more businesses ineligible for credit.
The sectors with the most difficulty obtaining credit include construction, trucking and the small businesses.
The 25 survey respondents included banks Wells Fargo Co. (WFC) and Bank of America Corp. (BAC); equipment manufacturers with financing companies, including Caterpillar Inc. (CAT) and Deere & Co. (DE); and independent financing companies including CIT Group (CIT).
The Equipment Leasing and Finance Foundation's monthly confidence index measuring whether business conditions will continue to stabilize over the next four months rose to 54.3 for October from 53.8 in September.
-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com