Third-Party Lenders IBM, De Lage Landen Cut Channel Credit

Third-party lenders IBM Global Financing and De Lage Landen Financial Services have discontinued credit programs for solution providers and there is concern that more cuts are forthcoming.

Within the last week, Jay Tipton, vice president of Technology Specialists, saw credit lines cut by both American Express and IBM, moves that forced him to scramble to find replacement lines. "It takes time away from selling for me to work on this," Tipton said. "I don't know what I'm going to do. That's what I have to figure out."

Tipton said he got a call from American Express last week informing him that his line, which approached $30,000, had been reduced to about $10,000. Technology Specialists used the line mostly to pay recurring bills, he said. "It got cut down to where things started bouncing," he said.

American Express told Tipton it was concerned that his monthly charges were too high. He said a slow summer caused him to delay a payment, but he had caught up by October. Calls to American Express were not returned.

Meanwhile, Tipton also received an e-mail from IBM saying the company was discontinuing its IBM Flexible Credit program effective Jan. 5, 2009.

"While the IBM Flexible Credit offering has provided opportunity to enhance our channel relationships and support resellers with credit capacity, the program has not met the business goals that we set for it," wrote Robert Flood, IBM's director of commercial financing, Americas, in the e-mail.

The e-mail invites Tipton to apply for a new credit facility under IBM's Inventory Management program. Calls to Flood were not returned.

"At least they gave us two months' notice," Tipton said. "Our numbers are drastically up with IBM. It's very interesting because if things keep up, there's not going to be any credit for small resellers."

Tipton estimated that his total credit capacity had been reduced by about 25 percent.

Meanwhile, Michael Bidwell, vice president of Know Problem Business Technologies, said a $25,000 credit line he had with De Lage Landen Financial Services through D&H Distributing was cut overnight last week.

"I ordered on Monday. I ordered on Tuesday. When I tried to order on Wednesday, they called to tell me it came back refused," Bidwell said.

Bidwell said he called both parties, who blamed each other over the ending of the program. "They point fingers at each other but they never sent an e-mail or placed a call to their dealers," Bidwell said.

It's likely that De Lage Landen pulled the program because it didn't make economic sense for the lender with so few customers utilizing it. Calls to De Lage Landen were not returned.

Next: D&H Offers VARs Advice On Assuring Credit Access

Clarification: De Lage Landen only cut the D&H program and continues to offer other SMB credit programs to solution providers.