The equipment finance industry has soared to a record-breaking $1.34 trillion in 2023, showing just how essential financing has become in helping businesses invest in equipment and software. According to the Equipment Finance Industry Horizon Report 2024 by the Equipment Leasing & Finance Foundation, around 82% of businesses used some form of financing for their equipment and software (E&S) purchases this year. That means more than half of the $2.3 trillion invested in E&S was funded through leases, loans, or other credit options.

This report, released in collaboration with research firm Keybridge, dives into the trends and growth areas of the equipment finance industry. Conducted every two years, the Foundation’s survey assesses how much U.S. businesses rely on financing for equipment investments and what’s driving this market. Leigh Lytle, President of the Foundation, noted the industry’s crucial role, saying, “Our industry financed supply chains and supported business growth, helping stave off recessionary pressures amid inflation and high interest rates. This report offers must-have insights to help leaders stay ahead.”

Key Findings from the Report

1. Industry Growth

E&S investment, both financed and non-financed, saw a solid 5.3% jump to reach $2.3 trillion in 2023. The equipment finance industry grew by 7.1% from 2022, with nearly 58% of this spending financed by loans, leases, or credit lines.

2. Rising Demand for Financing

More businesses are turning to financing for their equipment needs. In fact, 82% of survey respondents who bought equipment or software in 2023 used financing, up slightly from 79% in 2022. This trend shows a steady reliance on financing for capital investments.

3. Increased E&S Acquisitions Expected by 2025

Looking forward, 42% of end-users anticipate increasing their equipment and software acquisitions in 2025, compared to just 15% who expect a decrease. High-growth areas include software, computers, office tools, and communication equipment, all essential in an era of remote work, digital channels, and advanced tech.

4. Emerging Trends and Growth Areas

New areas like generative AI, Equipment-as-a-Service (EaaS), and climate-related investments are becoming popular. The survey shows that 42% of end-users already use generative AI, with another 42% planning to in the next two years. Nearly a third of equipment acquisitions this year focused on climate and environmental goals, a trend likely to grow as global climate finance scales up.

5. Popular Payment Methods

Leasing took the top spot for financed equipment, with 26% of total acquisitions, followed by secured loans (16%) and lines of credit (14%). For non-financed purchases, businesses favored paid-in-full credit card purchases and cash.

6. Reasons for Choosing Financing

The top reasons for financing included managing cash flow (62%), protecting against equipment obsolescence (55%), and gaining tax benefits (51%).

The report, supported by insights from Zack Marsh, Chair of the Equipment Leasing & Finance Foundation, provides a roadmap for equipment finance leaders to prepare for future growth. It’s a must-read for anyone in the industry looking to tap into emerging opportunities.