How to Adapt to Current Credit Challenges in Equipment Finance

The role of credit manager in the equipment finance industry has become significantly more difficult due to numerous factors influencing the credit markets, according to Gary LoMonaco, a senior managing director at The Alta Group and head of its Business Assessment practice. 

In a recent article in The Monitor, he discusses complicating factors including proposed tariffs, the termination of geopolitical alliances, and the enactment of the Current Expected Credit Loss (CECL) standard, as well as the proliferation of artificial intelligence and the lingering impact of inflation and higher interest rates. 

“Key to managing through these complex dynamics is seeing beyond the immediate issues, embracing change, and understanding your client base and your portfolio,” LoMonaco writes. 

Navigating Regulatory Shifts and Data Risks 

As the current administration acts to remove regulatory infrastructure, equipment finance companies will need a structured process to monitor changes in lending rules and regulations and assess their impact on operations. This includes maintaining close communication with legal counsel, industry associations, and regulatory bodies to anticipate potential impacts on lending practices, according to LoMonaco. 

Aggressive data protection is a must in today’s environment, he adds, citing a report by American Banker that the number of records leaked in data breaches in 2024 was greater than the number of people living in the United States. 

“Recent finance company data breaches at Finastra and others underscore the importance of data security and the magnitude of the threat,” LoMonaco writes. “Lenders today must approach the collection and holding of data as a significant source of risk.” 

Managing Portfolio Risk Amid Economic and Political Uncertainty 

As policy decisions by the Trump administration continue to have broad impacts on the general economy, credit teams must conduct a thorough portfolio review to understand risk and manage exposures. LoMonaco suggests they ask the following:  

• Does our company have exposure to endangered government departments or agencies, either directly or through borrower relationships? 

• Are we tracking state regulations across the spectrum of jurisdictions in which our company has concentrations? 

• Do we understand the changes in the regulatory environment and how they may impact our business model? 

• Are clients at risk of tariff-related margin compression and how can we help them manage through the issue? 

• Are clients diverting liquidity to amass pre-tariff raw materials and how might that affect their ability to repay? 

Adapting to AI, Customer Expectations and Industry Transformation 

Technology such as AI and machine learning is transforming the business landscape by improving processes and efficiency. Consumer behavior, meanwhile, has shifted as borrowers in 2025 are more informed and tech-savvy. They demand greater transparency and convenience in the lending process. Lenders need to pay close attention to both of these dynamics, LoMonaco writes. 

“Lenders that prioritize customer satisfaction and invest in digital platforms are more likely to attract and retain clients,” he writes, adding that the best companies combine a seamless client experience with a strong relationship orientation that maximizes the opportunity for repeat business. 

It’s critical that lenders adopt flexible risk-management strategies and closely monitor economic indicators. 

“The state of lending approvals in 2025 is marked by technological innovation, regulatory change, and higher borrower expectations,” LoMonaco writes. “Lenders that harness and continually improve the power of AI, prioritize data privacy, and offer exceptional customer experiences are well-positioned to thrive in this dynamic landscape. However, they must also address the challenges of cybersecurity and economic uncertainty to ensure sustainable growth.” 

Read the full article here.  

Having a partner like The Alta Group to help make sense of the current environment is more important than ever for continued success in the equipment finance market. 

The Alta Group’s comprehensive business assessments uncover vulnerabilities and help you build a stronger, more resilient operation. Work with Alta to turn insight into action and protect your path to growth.