Colonnade Securities LLC (“Colonnade”) released an update report on the small ticket leasing and finance industry. Colonnade has also released a podcast on the automobile loan re-finance sector. The small ticket equipment leasing and finance industry report can be accessed here and the auto loan re-finance sector podcast can be accessed here.
According to the small ticket equipment leasing and finance report, the industry was performing well for the past few years and early in 2020, but the environment changed abruptly when the scope of the coronavirus pandemic became apparent and all levels of government began to take necessary, drastic actions to curtail person-to-person transmission of the virus. In the report, Colonnade reviews the state of the small ticket equipment leasing and finance sector before COVID-19, the likely near-term impact on the sector and what might happen in the post-crisis environment.
Since Colonnade’s last report on the industry in September 2018, there has been robust M&A transaction activity in the small ticket leasing and finance industry. In fact, several new transactions were announced during the first two months of 2020 just before the scope of the pandemic emerged.
The economic disruption caused by the COVID-19 outbreak will weaken the commitment of some multi-line financial institutions to the small ticket equipment leasing and finance sector. This could lead to the spin-off or sale of subsidiaries or portfolios in the wake of the pandemic.
The CARES Act and additional aid will presumably reduce the level of business failures and will help the portfolios of small ticket leasing and finance firms. Colonnade remains confident in the long-term viability of the small ticket equipment leasing and finance industry.
Colonnade’s auto loan re-finance sector podcast reviews the impact of the pandemic on auto lending and how auto loan re-finance is the bright spot in the auto finance industry that is poised for growth.