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US business equipment borrowings fall in August, ELFA says

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  Published in Business and Finance on Wednesday, September 24th 2025 at 5:50 GMT by socastsrm.com
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US Business Equipment Borrowings Decline in August, ELFA Reports

In a sharp but not unprecedented dip, the Equipment Leasing and Finance Association (ELFA) announced that U.S. business equipment borrowings fell in August, signaling that companies are once again tightening their belts amid a climate of rising borrowing costs and muted economic outlooks. The decline—one of the most significant monthly swings in the last two years—was highlighted in ELFA’s latest data release, which gathered responses from more than 800 leasing and financing institutions across the country.

What the Numbers Say

ELFA’s August figures show a 2.4‑percent drop in total equipment borrowings compared with July 2025, a month that had seen a modest 0.8‑percent increase over its own prior month. In dollar terms, total borrowings in August amounted to $23.8 billion, down from $24.4 billion in July. The decline was primarily driven by a 2.1‑percent fall in lease demand, while loan activity slipped by 1.8 percent.

The data also highlight a shifting mix between leasing and financing: leases accounted for 59 % of total borrowing in August, a slight dip from 61 % in July. Loans, meanwhile, made up 41 % of the total, reflecting a modest shift toward the more flexible (but often costlier) leasing instrument during the period of heightened market uncertainty.

Why the Drop?

According to a statement from ELFA President and CEO Mary‑Ann K. Smith, the decline in borrowings reflects “a growing unease about the near‑term outlook, coupled with the fact that borrowing costs have been on the rise in recent weeks.” Smith noted that interest rates on new equipment finance had increased by 0.6 percentage points over the past three months, a trend that has made new borrowing more expensive for companies of all sizes.

Additionally, the data indicate that the enterprise confidence index—a key gauge of business sentiment—has slipped slightly, pointing to a cautious approach among companies as they navigate a mix of supply‑chain constraints and a cooling housing market that could dampen future demand. “When businesses see higher interest rates and a lower confidence outlook, they are less inclined to commit to long‑term financing for new equipment,” Smith explained.

Industry Context

ELFA’s report also ties the decline to broader macro‑economic trends. A linked article on the ELFA website—“Business Equipment Borrowings: A Look at the 2025 Cycle”—provides context, noting that this month’s drop comes after a series of modest gains in the first half of the year, which had been driven largely by the manufacturing sector’s expansion in the spring.

The linked press release offers a year‑to‑date comparison: since the start of 2025, U.S. business equipment borrowings have increased by 4.5 percent versus a 4.2 percent rise over the same period in 2024. While the annual growth remains positive, the August slowdown suggests that the uptick is fading. The press release also reports a decline in new equipment orders from the automotive sector, traditionally one of the biggest borrowers of leasing and financing services.

Sector‑Specific Insights

The ELFA data include a sector‑level breakdown. Manufacturing and professional services posted the largest declines, with borrowings falling 3.2 percent and 2.7 percent respectively. Conversely, the technology and healthcare sectors saw a modest 0.4 percent increase in borrowing, suggesting that high‑growth industries are still investing in capital equipment despite the broader slowdown.

An excerpt from the ELFA’s “Sector Report – August 2025” reveals that healthcare equipment borrowings rose due to a surge in investment in medical imaging and diagnostic equipment, a trend that the report attributes to ongoing demands for high‑quality patient care and newer, more advanced equipment. In the technology sector, the uptick was driven largely by software‑hardware co‑finance deals that allow companies to maintain capital flexibility.

Market Outlook

Looking ahead, ELFA’s research team projects a moderate rebound in borrowing activity over the next quarter, contingent on a stabilization of interest rates and an improvement in overall business sentiment. However, the release cautions that any further rate hikes could dampen this recovery, especially for smaller firms that rely heavily on leasing to maintain liquidity.

The article also mentions that alternative financing options—such as venture‑backed leasing and supply‑chain financing—may offer a partial cushion for companies looking to acquire equipment without committing large upfront capital. The ELFA’s linked “Alternative Financing Overview” details how these emerging tools are gaining traction, especially in the manufacturing and logistics sectors.

What This Means for Stakeholders

• For Manufacturers: The August dip signals a need to reassess capital budgeting plans, especially if the trend persists. Manufacturers may benefit from exploring flexible leasing terms or seeking short‑term financing to bridge the gap until the macro‑economic outlook improves.

• For Leasing Firms: The data underscore the importance of diversified portfolios. Firms heavily reliant on the manufacturing sector may face heightened risk exposure in a slow‑down period, whereas those with a broader mix—including technology and healthcare—could weather the downturn better.

• For Policymakers: The decline in borrowing could reflect the broader impact of monetary policy tightening. Policymakers monitoring economic activity may need to weigh the potential drag on business investment when considering further rate hikes.

Final Thoughts

The ELFA’s August borrowing report paints a nuanced picture: while the overall trajectory of business equipment borrowings remains upward for the year, the recent slowdown underscores the sensitivity of capital investment to interest‑rate dynamics and business confidence. As the industry navigates this period of tightening, both borrowers and financiers will need to adopt flexible, data‑driven strategies to maintain momentum and safeguard growth. The next few months will reveal whether the dip was a blip or the start of a longer‑term correction.