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 [donotmark]asset [/donotmark]finance surveys, citing the [donotmark]ELFA [/donotmark]as its source, the [donotmark][glossary_mark id="56219"]Equipment Leasing & Finance Foundation[/glossary_mark][/donotmark] ([donotmark]ELFF[/donotmark]) specified 17 [donotmark]types [/donotmark]of equipment in the [donotmark]ELFA [/donotmark]2016 “Survey of Equipment Finance Activity (SEFA)”.
Market segmentation in the equipment leasing market is commonly characterized by the [donotmark]type [/donotmark]of lessor and the [donotmark]lease[/donotmark] ticket size. An equipment market segment is the grouping and classification of equipment sales or financing transactions into subgroups based on [donotmark]type [/donotmark]of equipment, the [donotmark]cost [/donotmark]of the [donotmark]underlying asset[/donotmark] (ticket size) or some other shared characteristic.
The original cost of the subject of the sale or financing of an [donotmark]asset [/donotmark]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 [donotmark]underwriters [/donotmark]to [donotmark]brokers[/donotmark], lawyers, accountants and other professionals. The ticket size also determines the risk exposure of the lessors and any lease funders.
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