VARs Scramble For Credit Sources As Textron, IBM Cancel Programs


The number of credit programs available to solution providers is getting smaller and the search for financing for projects is becoming more of a challenge, according to solution providers.

Just in the last two months, managers of at least three channel financing programs for VARs said they were closing or making their terms stricter due to the weakening economy.

As a result, many solution providers are scrambling to find alternative sources of financing for their customers' IT purchases at a time when traditional sources of credit are drying up.

First, IBM closed its Flexible Credit program, which had been geared toward smaller businesses and offered quick approvals. The IBM Flexible Credit program did not meet the business objectives set for the program, according to a spokesperson for IBM Global Financing.

"Late last year, we advised business partners that we would be discontinuing the program and that they should switch to our business-as-usual inventory financing offerings. This has been a smooth process, and we are happy to offer high-value financing capabilities to our clients," the spokesperson said.

IBM also limited a leasing program that previously was open to any technology products to just IBM and Lenovo products, along with a couple of supporting vendors.

The IGF spokesperson said it shouldn't be surprising that IBM would be deferential to clients and business partners that want to fund IBM equipment, software and services. "It's no secret that liquidity has tightened in the marketplace and funds are scarce," the spokesperson said.

IBM still has plenty of credit programs for small solution providers, all the way to billion-dollar businesses, said the spokesperson.

"We are a part of a larger brand and our mission is to help clients leverage the very best financing offerings, including flexible leases and loans, to access IBM best-in-class technology solutions and those of our vendor partners (Lenovo, InfoPrint, Juniper, APC, Motorola and Barco). We will still fund other OEM technology that is part of a greater IBM solution," he said.

But the changes are still troubling to some solution providers. Jeff Albright, founder of Albright Consulting Services, Evansville, Ind., had used the IBM Flexible Credit program to supplement a terms account he has with Arrow Electronics.

The solution provider said his business typically involves a small number of very large deals each year. "This effectively puts the kibosh on us doing big deals. I don't know what we'll do if we come up with another $1 million opportunity," Albright said. "It was quite shocking. The whole plan from IBM Global Financing was to be in the SMB market. Yet they're killing the very guys that have access to those kinds of clients."

 

Next: Some See Competitive Advantage With Tightening Credit