T Sectors Report HE EQUIPMENT LEASING AND FINANCE INDUSTRY has been enjoying quarter after quarter of strong portfolio quality and new business generation. The uncertainty about the impact of the Patient Protection and Affordable Care Act and mid-term election results that kept businesses cautious in late 2013 and early 2014 seem to be distant memories. And, while credit requirements and competition remain tougher than they have been in years past—and a relatively slow economic recovery has not been a friend to the industry—members have largely been able to rely on incremental growth as busi-nesses become more confident about spending overall and return to replacing equipment and even making new investments. These are some of the findings of ELFA’s Q1 2015 Beige Book, which takes the pulse of the industry’s four primary sectors—captive and vendor finance firms, financial institu-tions, independent middle market companies and small tick-et firms—each represented by a Business Council Steering Committee (BCSC). While a few concerns dot the horizon, including a rising interest rate climate and new accounting standards, members are largely experiencing new business growth and optimism about the future. “Everyone I talk to in the business says they see things holding steady,” says Gary LoMonaco, Chair of the Inde-pendent Middle Market BCSC and Vice President and Treas-urer at Forsythe/McArthur Associates, Inc. in Skokie, Ill. Chairpersons of four ELFA BCSCs reviewed the Q1 2015 Beige Book data and discussed what it means for ELFA mem-bers, as well as what to look for in the coming year. Strong Foundations, Strong Competition Overall, 68% of members surveyed reported an increase in new business, with the majority citing increased customer demand as the driver. Portfolio quality remained strong overall—not surprising since underwriting standards have been relatively stringent since the recession. There was one exception: roughly 30% of small ticket members cited a de-cline in new business. That was a surprise to Kristin Darby, Chair of the Small Ticket BCSC and Vice President, Risk Management at West-ern Equipment Finance, Inc. in Devils Lake, N.D. Overall, she’s seen new business volume remain strong but says this could be an indicator of more competition in the small ticket sector, keeping spreads low and perhaps cutting into some small ticket companies’ volume. “There are more and more large companies that have started doing business in the small ticket market. There’s a larger crossover between segments. Rates are low, so every-body’s really out there looking for business,” she says. “ Everyone I talk to in the business says they see things holding steady.” Gary LoMonaco, Independent Middle Market BCSC Chair 34 JULY/AUGUST/SEPTEMBER 2015 EQUIPMENT LEASING & FINANCE MAGAZINE ISTOCK