With the start of a year that is expected to have less inflation, monetary easing and more economic growth, Mitsubishi HC Capital America, the largest non-bank, non-captive finance provider in North America, has outlined six key predictions that are likely to play a significant role in shaping the equipment finance industry in 2025.
“The convergence of economic shifts and technological advancements in 2024 has created a unique financing landscape for 2025,” said Brian Rosa, President of Commercial Finance for Mitsubishi HC Capital America.
“While many organizations may take a measured approach initially, we’re seeing that those who strategically leverage financing solutions – particularly for technology and sustainability initiatives – are positioning themselves for significant growth.”
1. Banks pull back on small business lending
Recent Federal Reserve data shows bank lending to small businesses dropped by 18% in 2024. However, the U.S. Chamber of Commerce reports 60% of small businesses plan to make significant capital investments in 2025, up from 42% two years ago.
This divergence creates both challenges and opportunities for small businesses looking to secure financing in 2025. Small business owners should partner with independent lenders for creative and flexible financing options to stay competitive and thrive in the new year.
2. AI and supercomputing needs will need financing support
Much like the infinite nature of the scale that supercomputing projects offer the world, financing these projects feels equally as infinite.
Large scale computing projects involving AI or cloud computing will become more frequent and larger in 2025 and in the years to come.
Driven by hyperscalers and other large companies, these projects require a significant amount of time, capital and energy to complete.
“Financing models that can support project completion and scale as the project grows will be a necessary lever for tech companies to support these projects,” adds Rosa.
3. Technology enables new financing models and competitive advantage
“Advancements in technology are revolutionizing equipment financing through enhanced usage analytics and “as-a-service” models,” explains Rosa.
“Advanced IoT and telematics now provide real-time analytics and insights, enabling both financing providers and customers to make faster, more informed decisions about equipment utilization.”
This technology allows lenders to develop more competitive rates based on actual usage patterns, while creating new opportunities for usage-based financing structures.
Beyond basic implementation, organizations that can creatively apply these technological capabilities to develop innovative financing solutions will gain a competitive edge.
The winners, he says, will be those who can leverage these tools to identify market trends faster and develop flexible financing arrangements that align with true operational needs.
4. High inventory levels will make rentals attractive
The flexibility of short-term leases and equipment rental opportunities are helping organizations take advantage of higher inventory levels and use new technology without a large payment or significant operating expense.
Rosa explains, “Short-term leases provide organizations with more flexibility, and the financing landscape is evolving to support this trend.”
He further says that the increasing popularity of these financing models will help organizations more accurately budget for a project, allowing them to buy the equipment they need without restricting their up-front cash flow.
With an increase in demand for projects and an influx of equipment that is available, Rosa projects it will be less expensive and more flexible for companies to rent equipment.
5. Business case for sustainability remains strong
In recent years, both U.S. and Canadian governments and corporations have pulled back on sustainability initiatives. However, the business case for sustainability remains strong and we expect corporations to continue to fund sustainability programs, says Rosa.
He adds, “Prioritizing sustainability initiatives that have a direct business case will aid organizations in making an impact not just on the world, but also their bottom line.
From financing electric vehicle projects to supporting more sustainable manufacturing in supply chains, environmentally friendly investments will drive shareholder returns on clean energy targets.”
6. Shifting Political Dynamics in the U.S. and Canada
New leadership in the U.S. with talks of international tariffs, along with a very fluid political environment in Canada, will impact both countries in 2025, predicts Rosa.
He expects governments in both countries to take a cautious approach to determine the next steps with rate cuts as economic data is released.
“Organizations that position themselves to take advantage of new regulations or seize new opportunities quickly will be well suited in 2025,” Rosa anticipates.
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