The 2014 equipment finance market in government
GPN asked Tom Howard about equipment financing trends for governments in 2014. Howard is Vice President, Director of Government Finance at Cherry Hill, N.J.-based TD Equipment Finance (TDEF).
The company offers a variety of equipment financing programs that can be an alternative to traditional financing. Howard is based in TD’s offices in Vienna, Va. TDEF’s sister company, Toronto-based TD Securities, gets involved in equipment financing for public-private partnerships in both Canada and the U.S.
GPN: What are the highlights of equipment finance and leasing trends for state and local governments in 2014?
Tom Howard: I expect there to be little change here from 2013. Even the financially best positioned state and local government will continue to be conservative in their capital acquisitions during 2014, replacing the worn-out equipment and spending for upgrades as required by good sense and safety. The negative Detroit situation will certainly affect availability negatively for weaker municipal credits.
The 911 systems and related communications equipment will continue to move to digital equipment. Some delayed equipment replacement will get done, and it will be a better year for municipal equipment financing volume overall than 2013.
Financing rates will still be very competitive and only flat or slightly up. Deal structure will continue to be important and has been affected by continued US attention to banking regulation and capital requirements
GPN: What equipment or product categories will stand out in the finance/leasing market in 2014?
TH: The products or uses that are deemed less essential will continue to be more difficult to get financed. IT, communications, public safety, student safety and transportation, healthcare equipment, and heavy equipment will continue to do well.
GPN: Do you have any advice for fleet managers who need to lease equipment in 2014?
TH: Since rates are still at historic lows, fill your essential longer-term equipment needs over the next six months, before the U.S. Federal Reserve makes changes in its current approach to the U.S. economy.
GPN: How do you see the 2014 heavy equipment financing market shaping up?
TH: I think it will be an uneven year with the ups and downs continuing for the overall U.S. economy. U.S. federal government budget issues will also continue. Still, the heavy equipment financing market should be slightly better than 2013, simply due to requirements to replace aging equipment that is just too expensive to keep maintaining.
GPN: Thank you, Tom Howard.
Thomas B. Howard Jr., CPA, CGMA is TDEF’s Vice President, Director of Government Finance. He has been with TDEF since February 2007 and has been in the equipment finance and specialty lending industry for more than 35 years. Howard earned his undergraduate degree in accounting at the University of Maryland and has an MBA in finance from Loyola College.
Go here for Tom Howard’s 2012 forecast on equipment finance trends in government.