Giving Credit Where It's Due

Tech Data has boosted the credit lines of 1,728 solution providers focused on government and education accounts by a total of $42.4 million in preparation for the upcoming federal buying season.

The Clearwater, Fla.-based distributor has made several other credit increases this year for SMB solution providers, too, said Mike Zava, vice president of credit and customer service, the Americas, at Tech Data.

Similarly, Ingram Micro recently increased credit lines for 1,851 solution providers by $11 million during its annual examination of risk profiles.

The economy is recovering, and solution providers need more credit to address growing prospects, Zava said. "We are feeling business coming back a bit. It's not like it was a few years ago when salespeople would take inbound calls and couldn't handle them. But I feel the market is getting aggressive," he said.

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Tech Data used six or seven factors to determine the permanent credit line increases, which were either 25 percent, 50 percent or 100 percent extensions to solution providers' existing credit lines, Zava said.

Planet Technologies, a Gaithersburg, Md., solution provider that sells to the federal government, had its credit line doubled by Tech Data, said Scott Tucker, president of the company.

Planet Technologies' business spiked after Sept. 11, requiring it to work with Tech Data on more creative financing to complete many larger projects. Sales have steadily increased since that time, and the solution provider needed a more permanent uplift, Tucker said.

"We are able to finance some substantial opportunities. Having Tech Data be flexible with their terms enabled us to get into some strategic opportunities and show clients we're a contender," he said.

Tech Data culled the 1,728 solution providers who received credit increases from about 5,000 candidates, Zava said. Among the criteria the distributor used to evaluate the candidates were average paydays, normal purchase volume and percentage of increased purchase volume.