Most CapEx investments financed, survey finds.

• Author: Marshall, Jeffrey
• Position: FINANCING - Survey

Research shows that the majority of capital expenditure investments in plant, equipment and software are financed, either through loans, leases or lines of credit secured by plant or equipment assets. In 2006, for instance, $600 billion, or 55 percent of the estimated $1.09 trillion dollars in public and private investment, was financed, according to a survey by the Equipment Leasing and Finance Association (ELFA).

The group's 2007 estimate for equipment finance volume is $625 billion, a total it says "reflects the difficult environment for business fixed investment due to the lower growth rate in final demand, rather than a corporate or small business credit crunch."

The ELFA survey produced a number of observations:

* Software acquisitions are overwhelmingly financed using cash or internal funds; trucks and tractor trailers rely most heavily on equipment financing; construction and office machinery were acquired through equipment financing.

* Company size is one of the major factors to influence financing methods: very small firms (fewer than 51 employees) are much more likely to finance acquisitions out of available funds or cash...