Report: Global Equipment Finance Services Market Could Hit $3.08T by 2032
A new report published by Allied Market Research suggests the Equipment Finance Services Market could hit more than $3.08 trillion by 2032. According to the report- Equipment Finance Services Market by Type, Provider, and Application: Global Opportunity Analysis and Industry Forecast, 2022-2032 - the global equipment finance services market was valued at $1.2 trillion in 2022, and is projected to reach $3.1 trillion by 2032, growing at a CAGR of 9.7% from 2023 to 2032.
Prime determinants of growth
The equipment finance services market is driven by technological advancements such as AI, blockchain and IoT, which revolutionize the asset management and financing processes, thereby attracting both providers and consumers toward equipment finance solutions. Furthermore, evolving consumer preferences and demands for flexible financing options and value-added services drive the market growth.
However, regulatory compliance and economic uncertainties restrain the equipment finance services market growth. On the contrary, the growing trend towards sustainability and environmental consciousness to offer green financing solutions is raising the demand for eco-friendly equipment and practices. Moreover, partnerships and collaborations across industries enable equipment finance companies to leverage complementary expertise and resources, expanding their market reach and enhancing their service offerings to meet diverse customer needs in the upcoming years.
By type, the equipment loan segment held the highest market share in 2022, accounting for more than two-thirds of the global equipment finance services market revenue, and is estimated to maintain its leadership status throughout the forecast period. This is attributed to the increasing demand for modernized equipment across various industries, coupled with favorable financing terms and accessibility for businesses of all sizes.
Moreover, the need for flexible repayment options and the potential tax benefits associated with equipment loans further contribute to its expansion. However, the equipment lease segment is projected to manifest the highest CAGR of 12.3% from 2023 to 2032. This is attributed to the fact that it offers businesses the flexibility to acquire necessary equipment without a substantial upfront investment, preserving capital for other operational expenses or investments. Furthermore, leasing allows businesses to access the latest equipment technology without the burden of ownership, enabling them to remain competitive and adaptable to evolving industry standards and customer demands.
By region, North America held the highest market share in terms of revenue in 2022, accounting for more than one-third of the equipment finance services market revenue and is estimated to maintain its leadership status throughout the forecast period. This is attributed to the technological advancements that are driving the demand for updated equipment across various industries, necessitating flexible financing options to facilitate equipment acquisition in the region.
U.S. payrolls grew by 256,000 in December, much more than expected; unemployment rate falls to 4.1%
Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast.
The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. A broader jobless measure moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook.
Stock market futures plunged after the report while Treasury yields soared as traders price in a lower probability of Fed rate cuts this year.
Job growth was much stronger than expected in December, likely providing the Federal Reserve less incentive to cut interest rates this year.
Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday.
The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. An alternative measure that includes discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
Stocks plunged plunged after the report while Treasury yields soared as traders price in a lower probability of Fed rate cuts this year.
“This is a hot report,” said Dan North, senior economist for North America at Allianz Trade. “You have to think that [Fed Chair] Jerome Powell is breathing a sigh of relief in the sense that his job just got a little bit easier. Inflation hasn’t been moving anywhere for months, so there’s no incentive to cut rates. Now you get this [jobs report] so you don’t need to cut rates to stimulate the economy.”
The report brings to a close a year in which employment grew each month, though inconsistently and at times raising questions over whether a recession loomed. However, the final two months showed a labor market still operating at strength as the Fed contemplates its next moves on monetary policy.
One area that Fed officials have stressed to not be a source of inflation is the labor market, and wages grew slightly less than expected.
Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook and indicative that wage inflation at least is becoming less of a factor. The average workweek again held steady at 34.3 hours.
“You’re never going to hear me complain that we got 250,000 jobs,” Chicago Fed President Austan Goolsbee said on CNBC’s “Squawk on the Street.” “I think it’s a strong jobs report. It makes me further comfortable that the job market is stabilizing at something like the full employment rate.”
Job growth came from the familiar sources of health care (up 46,000), leisure and hospitality (43,000), and government (33,000).
Retail also saw a sizeable gain, up 43,000 after losing 29,000 in November heading into the holiday shopping season. The sector saw payroll growth of 2.2 million for the full year, down sharply from the 3 million gain in 2023.
Revisions for prior months were less substantial than has been the recent trend. The October count saw an upward change of 7,000 to 43,000, while the November number was cut by 15,000 from the prior estimate.
At their December meeting, Fed officials deemed the labor market mostly healthy though slowing. The Fed voted at the meeting to lower its key borrowing rate by a quarter percentage point while indicating a slower pace of reductions ahead.
Markets expect the Fed to hold pat at the meeting later this month, with futures pricing after the jobs report swinging to the expectation of just one cut this year. The market-implied probability of a single cut increased to 68.5% after the jobs report, according to the CME Group’s FedWatch gauge.
Goolsbee said he still expects rate cuts this year as long as the data flow stays consistent.
“The surprisingly strong jobs report certainly isn’t going to make the Fed less hawkish,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “All eyes will now turn to next week’s inflation data, but even a downside surprise in those numbers probably won’t be enough to get the Fed to cut rates any time soon.”
Central bankers have expressed concern lately with the pace of inflation, which has held above the Fed’s 2% target largely because of stubbornly high housing costs as well as some goods prices.
The household report, which the BLS uses to calculate the unemployment rate, presented an even stronger jobs picture. That count increased by 478,000 on the month , as the labor force grew by 243,000 and the share of working age people either holding jobs or looking for employment held steady at 62.5%.
Full-time employment increased by 87,000, while part-time workers surged by 247,000. The level of unemployed workers fell by 235,000.
The duration of unemployment edged higher to 23.7 weeks, the highest level since April 2022. However, those reporting out of work for 27 weeks or more declined to 1.55 million, down 103,000.
2024 Small Business Earnings Report
The 2024 Small Business Earnings Report offers a comprehensive snapshot of the financial health of small to mid-sized businesses in the United States. This newly introduced Small Business Earnings Index analyzes data from companies that applied for business credit in 2024, providing valuable insights into the current state of small businesses across various industries.
Average Earnings and Inflation
The average earnings for small businesses in the first 11 months of 2024 stood at $86,809. Inflation remains a concern, hovering around 2.6%, which is above the Federal Reserve's target rate of 2.0% but lower than the average rates seen in 2023 (4.1%) and 2022 (8%).
Revenue and Expense Trends
Highest average revenues ($824,700) were recorded in July 2024
Highest average expenses ($709,000) occurred in October 2024
July was the most profitable month, with earnings reaching $136,800
Year-over-Year Comparison -
When comparing 2024 to 2023:
Average revenues increased by $232,410
Average expenses rose by $296,517
However, profits decreased by $64,108
Implications for the Economy
The report emphasizes the critical role of small businesses in the U.S. economy, particularly in job creation. With President-elect Trump set to return to the White House, there's an expectation that small business growth will be a priority, alongside addressing inflation, interest rates, and overall economic concerns.
Understanding the Lifecycle of Equipment Financing
You know you need equipment to run and grow your business. You also know you don’t want to or can’t fund a big outlay of capital to obtain that essential business equipment. Sounds like a catch-22, right? Not necessarily. This is where equipment financing comes into play. Being approved for equipment financing allows you to get the equipment you need for a thriving business without depleting or tying up your cash reserves.
The process of financing equipment isn’t cut and dry, especially if you’ve struggled with credit approval in the past due to any number of reasons. If this sounds familiar, you’re not out of equipment financing options. While traditional lending institutions may reject your application, alternative or direct lenders can often approve your equipment financing. When you better understand the lifecycle of an equipment financing deal, you’re better positioned to make informed decisions and navigate the process smoothly. Here’s a closer look at the seven stages involved, from your initial application to the final repayment.
1. Initial Inquiry and Assessment
The lifecycle begins as soon as you identify the need for new equipment. This could be anything from construction machinery to medical equipment. At this point, you reach out to a lending consultant, like SB Finance, to explore your options. What sets SB Finance apart is our ability to tailor solutions specifically to your needs. Our team looks at each application uniquely. We focus on your ability to service your current and proposed debt rather than just your credit score—in other words, “your story. The goal here is to understand your business's needs and your financial situation to offer the most suitable financing options.
2. Equipment Financing Application and Documentation
Once the preliminary assessment is complete, the next step is filling out an equipment financing application. SB Finance has access to over 700 lenders, which means more flexibility and quicker decisions compared to traditional lenders and big banks. You will need to provide documentation that supports your ability to repay the financing request, such as financial statements, tax returns and details about the equipment being financed.
This stage also involves discussing the financing terms, including interest rates, repayment schedules and any collateral requirements. Since SB Finance supplies fast, flexible equipment financing to non-investment grade companies, we are often able to finance business owners who might not qualify for traditional financing requests.
3. Credit Review and Approval
The approval process is where you’ll notice SB Finance is truly different from other lenders Instead of relying heavily on credit scores, the approval is based primarily on your ability to service your current and proposed debt. This approach is a miracle for business owners who have strong cash flow but may not have stellar credit.
As a nationwide lending consultant, SB Finance has the expertise to assess a wide range of industries and business models. The credit review process is handled quickly because you’re working directly with our decision-makers, meaning you get the equipment you need, if approved, without waiting weeks or months.
4. Agreement and Funding
Once approved, the financing agreement is drawn up. This document outlines all the terms and conditions, including the financing amount, interest rate, payment schedule and any specific covenants or requirements. At this point, you review the agreement and ask any questions you might have.
After the agreement is signed, the funds are disbursed quickly.
5. Equipment Acquisition and Implementation
With the funds approved and available, you’re free to lease or purchase your new or pre-owned essential business equipment. This stage involves working with the equipment vendor and ensuring that the purchase aligns with the financing terms. Once the equipment is acquired, it’s put into operation, and you can start to benefit from the new asset, from accepting to contracts, expanding your services or offering new services and/or products.
6. Repayment and Relationship Management
The final stage in the lifecycle of equipment financing is repayment. Repayments are made according to the agreed-upon schedule. SB Finance’s flexible repayment options are designed to fit the cash flow patterns of the business, ensuring that repayments are manageable. The phrase, “Your success is our success” is never truer than in a financing relationship.
Throughout the repayment period, SB Finance continues to maintain a relationship you. Communication is the best way to handle any hiccups and adjustments if your business’s circumstances change and provides opportunities for additional financing as your business grows.
7. Term Maturity and Renewal Options
As the equipment financing agreement approaches its contractual term, you have several options. Either pay off the remaining balance, refinance the equipment or explore additional financing for new equipment needs. SB Finance’s role as a full-service lending consultant means we can offer various options, tailored to your evolving needs.
Renewal options are particularly beneficial if you’re in an industry where you need to continuously upgrade equipment to stay competitive. By refinancing or entering into new agreements, you always have access to the latest technology without straining your capital reserves.
The future of financial analysis: How GPT-4 is disrupting the industry
Researchers from the University of Chicago have demonstrated that large language models (LLMs) can conduct financial statement analysis with accuracy rivaling and even surpassing that of professional analysts. The findings, published in a working paper titled “Financial Statement Analysis with Large Language Models,” could have major implications for the future of financial analysis and decision-making.
The researchers tested the performance of GPT-4, a state-of-the-art LLM developed by OpenAI, on the task of analyzing corporate financial statements to predict future earnings growth. Remarkably, even when provided only with standardized, anonymized balance sheets, and income statements devoid of any textual context, GPT-4 was able to outperform human analysts.
“We find that the prediction accuracy of the LLM is on par with the performance of a narrowly trained state-of-the-art ML model,” the authors write. “LLM prediction does not stem from its training memory. Instead, we find that the LLM generates useful narrative insights about a company’s future performance.”
Chain-of-thought prompts emulate human analyst reasoning
A key innovation was the use of “chain-of-thought” prompts that guided GPT-4 to emulate the analytical process of a financial analyst, identifying trends, computing ratios, and synthesizing the information to form a prediction. This enhanced version of GPT-4 achieved a 60% accuracy in predicting the direction of future earnings, notably higher than the 53-57% range of human analyst forecasts.
“Taken together, our results suggest that LLMs may take a central role in decision-making,” the researchers conclude. They note that the LLM’s advantage likely stems from its vast knowledge base and ability to recognize patterns and business concepts, allowing it to perform intuitive reasoning even with incomplete information.
The findings are all the more remarkable given that numerical analysis has traditionally been a challenge for language models. “One of the most challenging domains for a language model is the numerical domain, where the model needs to carry out computations, perform human-like interpretations, and make complex judgments,” said Alex Kim, one of the study’s co-authors. “While LLMs are effective at textual tasks, their understanding of numbers typically comes from the narrative context and they lack deep numerical reasoning or the flexibility of a human mind.”
Some experts caution that the “ANN” model used as a benchmark in the study may not represent the state-of-the-art in quantitative finance. “That ANN benchmark is nowhere near state of the art,” commented one practitioner on the Hacker News forum. “People didn’t stop working on this in 1989 — they realized they can make lots of money doing it and do it privately.”
Nevertheless, the ability of a general-purpose language model to match the performance of specialized ML models and exceed human experts points to the disruptive potential of LLMs in the financial domain. The authors have also created an interactive web application to showcase GPT-4’s capabilities for curious readers, though they caution that its accuracy should be independently verified.
As AI continues its rapid advance, the role of the financial analyst may be the next to be transformed. While human expertise and judgment are unlikely to be fully replaced anytime soon, powerful tools like GPT-4 could greatly augment and streamline the work of analysts, potentially reshaping the field of financial statement analysis in the years to come.