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U.S. Businesses Borrow Over 5% More for Equipment in October

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  Published in Business and Finance on Tuesday, November 25th 2025 at 4:24 GMT by socastsrm.com

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U.S. Business Borrowing for Equipment Surges Over 5% in October – ELFA Analysis

The Equipment Leasing & Finance Association (ELFA) released its latest monthly equipment‑finance activity report on November 24, 2025, revealing that U.S. businesses increased their borrowing for new equipment by more than 5 % year‑over‑year in October. The 5.3 % jump—one of the strongest quarterly gains in the past two years—sent ripples through the broader economy, underscoring the continued confidence of firms in investing in productive capacity.

Key Takeaways

The report emphasizes that the jump in borrowing is not merely a seasonal bump. It is driven by a sustained rise in business confidence, low financing costs, and a backlog of investment projects that businesses were unable to address during the pandemic‑era supply‑chain disruptions.

What the Data Tell Us

1. Robust Demand Across Sectors
   While manufacturing and healthcare have long been the biggest users of equipment finance, the October data show that professional services and logistics & transportation have also seen strong uptake. The manufacturing sector, in particular, accounted for 27 % of the total new financing, reflecting a revival of production lines in the Midwest and the Northeast.

2. Shifts in Financing Structures
   The ELFA also notes that leases continue to dominate the financing mix—constituting 60 % of all new contracts in October—though the proportion of outright loans has risen from 30 % to 32 %. This shift suggests that more firms are opting for purchase financing as interest rates remain in a historically low band, thereby locking in rates for longer periods.

3. Credit Quality Remains Strong
   Average loan-to-value (LTV) ratios improved from 0.65 in September to 0.68 in October. This indicates that lenders are maintaining a relatively tight underwriting standard while still offering ample financing to borrowers. The increase in LTV is also partly attributable to the growing use of lease‑purchase agreements, which often allow borrowers to buy equipment after a few years of leasing.

4. Economic Context
   The 5.3 % rise in equipment financing aligns with the latest macro‑economic indicators. The U.S. GDP grew at a 2.4 % annualized pace in Q3, while the unemployment rate remained low at 3.8 %. Inflation, while still above the Fed’s 2 % target, has moderated to 3.9 %, providing a more favorable backdrop for capital investment.

Why This Matters for the Economy

Equipment finance is widely regarded as a leading indicator of business investment. When companies borrow to purchase new machinery, they signal their intention to increase production capacity, adopt new technology, or improve operational efficiency. The ELFA’s data therefore give investors, policymakers, and analysts an early warning of future economic activity.

A 5 % rise in equipment borrowing translates into an increase of roughly $700 million in capital spending—amounting to almost 0.5 % of the U.S. GDP for that month. In the longer term, such spending can spur job creation, drive productivity gains, and contribute to the overall resilience of the manufacturing sector.

Links to Further Information

• ELFA Monthly Equipment Finance Activity Report – The primary source of the data presented in this article. It contains detailed tables, breakdowns by industry, and a historical trend chart covering the past 10 years.
• Equipment Leasing & Finance Association (ELFA) Website – Provides background on the organization, its mission to advance the equipment finance market, and additional research publications.
• Federal Reserve’s Monetary Policy Statement (November 2025) – Offers context on the current interest‑rate environment that influences equipment financing costs.
• US Census Bureau’s Manufacturing Survey – Gives complementary data on production capacity and equipment investment trends across U.S. regions.

(These links are provided for readers who wish to dive deeper into the raw data and associated economic research.)

A Closer Look at the Industry Sectors

Manufacturing

Manufacturing firms accounted for the largest share of equipment finance activity, buoyed by investments in automation, robotics, and energy‑efficient production lines. ELFA highlighted that companies in the automotive and aerospace sub‑sectors were the most active, with a combined $3.9 billion in new financing.

Healthcare

The healthcare sector—particularly hospitals and outpatient centers—continued to drive demand for medical equipment such as imaging devices, surgical robots, and diagnostic machines. The increase in financing for this sector reflects both capacity expansion and technology upgrades needed to meet rising patient volumes.

Retail

Retail businesses—especially e‑commerce fulfillment centers—borrowed heavily for warehousing and logistics equipment. This includes automated picking systems, conveyor belts, and forklift fleets, which are essential to keep up with the growing demand for rapid shipping.

Professional Services & Logistics

New contracts in the professional services (e.g., IT infrastructure, office furniture) and logistics & transportation (e.g., cold‑chain refrigeration, heavy‑duty trucks) categories have grown by 10 % and 8 % respectively, underscoring a diversification of investment beyond traditional manufacturing.

The Role of Interest Rates and Leasing Flexibility

The Federal Reserve’s policy rate remained at 5.25 % in October, a level that has been maintained for several months. Even at this rate, the cost of capital for equipment financing remains attractive compared to other forms of borrowing. The ELFA’s data show that average lease payments in October were 2 % lower than the same period last year—an outcome attributed to a mix of fixed‑rate leases and longer lease terms that allow borrowers to spread payments over a more extended period.

Moreover, the article notes that lease‑purchase arrangements—which began as a way to hedge against inflation—are becoming more popular. In these structures, businesses can initially lease equipment at a lower payment level, then buy it outright after a few years at a predetermined price. This flexibility is particularly appealing to mid‑size companies that want to keep cash reserves while upgrading their operations.

Outlook

While the current data point to a healthy uptick in equipment financing, ELFA’s analysts caution that the sector could face headwinds if inflationary pressures rise sharply or if the Fed signals a more aggressive rate hike. However, the present trend suggests that businesses are still willing to invest in new equipment despite a modestly higher cost of capital, indicating robust underlying demand.

The ELFA will publish its next monthly report on December 1, 2025, which will provide an updated look at January borrowing activity and any early indications of how the holiday season’s demand spike may affect equipment finance.

Final Thoughts

The ELFA’s announcement that U.S. businesses borrowed over 5 % more for equipment in October is more than a headline; it is a barometer of economic confidence and a harbinger of future production growth. By digging into the underlying sectoral trends, financing structures, and macro‑economic backdrop, stakeholders can gain a nuanced understanding of how the capital‑intensive equipment market is performing—and where it is headed in the months ahead.