Jan 26 (Reuters) - U.S. companies borrowed 5.9% more to finance equipment purchases in December than a year earlier, reaching the second-highest level ever, the Equipment Leasing and Finance Association said on Monday.

New loans, leases and lines of credit signed up by companies in December were $10.6 billion on a seasonally adjusted basis, an increase from the prior month.

The Washington-based trade association — which tracks economic activity in the equipment sector, valued at more than $1 trillion — said activity at banks was down 1.2% from the prior month.

"The data show that the equipment finance industry has not only weathered but thrived amid historic uncertainty," ELFA President and CEO Leigh Lytle said.

"While we expect some volatility in 2026, all signs point to another year of strong demand and stable financial conditions — especially as markets anticipate additional rate cuts later this year," she added.

The ELFA CapEx Finance Index of leasing and finance activity is based on a 25-member survey, including Bank of America BAC.N as well as the financing units of Caterpillar CAT.N, Dell Technologies DELL.N, Siemens AG SIEGn.DE, Canon 7751.T and Volvo AB VOLVb.ST.

The Equipment Leasing & Finance Foundation's, ELFA's non-profit affiliate, confidence index reached an 11-month high of 64.6 in January, up from 58.3 in December. A reading above 50 indicates a positive business outlook.

(Reporting by Megavarshini G. Somasundaram in Bengaluru; editing by Alan Barona)

((Megavarshini.SomasundaramGnanasundari@thomsonreuters.com;))