Deal volume was sluggish in Q3 2023, decreasing 1.3% quarter-over-quarter, with many portfolios yet to reset to the elevated interest rate environment. Charge-offs remain higher than previous years, but the slight drop this quarter was a promising sign for the sector after significant increases in recent quarters.

Liquidity concerns arising from high interest rates and ongoing economic uncertainty continue to pose headwinds for the industry, but independent lenders reported continued demand from borrowers seeking flexible financing alternatives as banks maintain tighter credit standards.

The ELFA’s monthly survey of key industry executives reported a slight rebound of industry confidence in July and August 2023, before holding flat at 50.3 in September. While the sector continues to face substantial headwinds, leaders see promise in the resilience it has shown thus far.