IBM Offers $2 Billion In 'Pre-Stimulus' Customer Financing

IBM is offering $2 billion in financing for business and government customers with IT projects that may be covered by the $787 billion American Recovery and Reinvestment Act (ARRA) stimulus bill. IBM said Thursday it is targeting the funds toward such projects as health-care technology, smart electric grids and broadband Internet access.

The funding, which IBM is making available through its IBM Global Financing lending and leasing business operation, will be used to provide customers with an expanded range of financing options such as flexible and deferred payment plans, financing through structured lines of credit and financing with low interest rates.

"It just makes sense for our customers and for our company," said Richard Dicks, IBM North American general manager. "Every financial person tells us that credit is very tight in the market," he said, referring to conversations he and other IBM executives have had with finance managers within IBM customer companies.

IBM has been promoting its "Smarter Planet" initiative that targets next-generation IT projects such as smart electricity grids, broadband Interest access and electronic health-care records -- many of the same kinds of IT projects targeted by the ARRA stimulus spending.

While many such projects are eligible for stimulus funding, those funds are unlikely to make their way through government pipelines until later this year or even 2010, Dicks said. With IBM in a strong cash position, the executive said it just made sense to apply that liquidity to IT projects that may ultimately win stimulus funds.

Dicks said the financing would be offered to credit-qualified customers through both direct sales and channel partners. He noted that some of the targeted technology areas, electronic health record systems for physician offices being a prime example, are served almost exclusively through solution providers.

Some of the funding will be offered through specialized project financing packages, Dicks said, such as payment deferrals for the first 90 days of a project and interest-only payments for the rest of the first year. Such payment plans are especially attractive for projects such as electronic health records, where the payback might not be realized for several years, he said.