Exclusive: U.S. business investment still dropping

By James B. Kelleher

CHICAGO (BestGrowthStock) – The pullback in business borrowing that was a key factor in the recession continued in December, but delinquencies and defaults by borrowers on existing loans eased, according to a trade group for lenders that finance half the capital equipment investment in the United States.

The Equipment Leasing and Finance Association told Reuters that the overall volume of financings used to fund equipment acquisitions fell to $7.1 billion in December, down 22 percent from last December.

But other measures tracked by ELFA suggested businesses were finding it a little easier to remain current on their existing loans.

ELFA said the percentage of borrowers delinquent 30 days or more on their capex loans, leases or lines of credit was 4.3 percent in December. That was up from 3.8 percent last year but down from 4.5 percent in November.

The percentage of receivables that the lenders considered uncollectable was 2.08 percent in December. Again, that was up from 1.58 percent last year but down from 2.4 percent in November.

Ralph Petta, ELFA’s interim president, characterized the numbers as “good news slash bad news.”

“While credit losses showed some improvement,” Petta said, “the industry still has a long way to go to return to the kind of positive growth we saw in the pre-recession economy.”

ELFA’s report, provided to Reuters a day ahead of its official release, provided a mixed picture of the state of financing and was consistent with other recent and similarly murky reports on the broader economy.

It was released on the same day the Conference Board said U.S. consumer confidence hit its highest level in nearly a year and a half in December, while the closely watched Standard & Poor’s/Case-Shiller index showed home prices slipping unexpectedly in November.

ELFA’s members include Bank of America Corp, Canon Financial Services, Caterpillar Financial Services Corp, CIT Group Inc, Dell Financial Services, John Deere Credit Corp, Siemens Financial Services and Verizon Capital Corp.

More than half the money invested in plants, equipment and software in the United States in any given year is financed with loans, leases and lines of credit.

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(Reporting by James B. Kelleher; Editing by Tim Dobbyn)

Exclusive: U.S. business investment still dropping