There is no standard for the definition and classification of equipment. While the White Clarke Group reports on nine segments of equipment finance in its annual US auto and asset finance surveys, citing the ELFA as its source, the Equipment Leasing & Finance Foundation (ELFF) specified 17 types of equipment in the ELFA 2016 “Survey of Equipment Finance Activity (SEFA)”.
Market segmentation in the equipment leasing market is commonly characterized by the type of lessor and the lease ticket size. An equipment market segment is the grouping and classification of equipment sales or financing transactions into subgroups based on type of equipment, the cost of the underlying asset (ticket size) or some other shared characteristic.
The original cost of the subject of the sale or financing of an asset is its ticket size, where the most common segments are small-ticket, mid-ticket and big-ticket. Ticket-size classification varies from market to market, trade association and rating agency. DBRS, ELFA and Fitch each classify equipment differently, according to ticket size.
| US Retail Equipment Leasing Ticket Size | |||
|---|---|---|---|
| Ticket | DBRS | ELFA | Fitch |
| Micro | – | $0 – $25,000 | – |
| Small | $15,000 – $100,000 | $25,000 – $250,000 | < $100,000 |
| Source: DBRS, ELFA and Fitch | |||
The ticket size of transactions determines its complexity and the skills of the parties to the transactions – from lease originators and underwriters to brokers, lawyers, accountants and other professionals. The ticket size also determines the risk exposure of the lessors and any lease funders.
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