Nothing stifles innovation more than a lack of capital. Sure, times are tough, but we need smaller channel partners and start-ups to drive that innovation – and killing credit means we kill off those opportunities for growth.
We’ve seen several examples over the past few months where industry has tightened the purse strings or just got out of the credit game altogether. Sure, vendors aren’t banks, but they directly benefit from these deals, so it’s within their best interest to keep smaller partners afloat.
While traditional sources of credit have been drying up, GE Capital decided to end its technology-leasing program and IBM shut down its Flexible Credit program (aimed at smaller businesses), since it didn’t meet the vendor’s business objectives. IBM Global Financing also tightened its lending practices.
Textron Financial Corp. has decided to get out of the finance business – except for its own products. Both Ingram and Arrow partner with Textron for financing and are now helping VARs who’ve been left in the lurch. Ingram is helping VARs find alternative lending sources, while Arrow is transitioning them to its other financing suppliers.
But it’s not all bad news. Tech Data is stepping up to the plate and offering new financing options to VARs, thanks to a financing relationship with Castle Pines Capital (which is affiliated with Wells Fargo and CIT Technology Financing Services).
The distie is offering 60-day financing – instead of the typical 30 days – for products from vendor partners such as Cisco, Fortinet, HP, Lexmark, SonicWall and Sony.
And, through CIT Technology Financing Services, it’s able to provide financing for software, which means VARs can offer leasing or managed services options to their customers – an area where they may actually see growth this year, as customers look for solutions that don’t require infrastructure investments.
HP Canada, for its part, is offering zero per cent financing on HP technology solutions.
To put things in perspective, despite the fact VARs no longer have access to IBM’s Flexible Credit program, they still have access to IBM’s other financing offerings. And IBM is still running its leasing program – just on a more limited basis (with IBM, Lenovo and a few other vendors). That’s understandable – if you’re going to lease products, you might as well lease your own, right?
But, at the same time, vendors such as IBM are trying to penetrate the SMB market – which, at this point, is a better business bet than big enterprise – so cutting back on financing programs that support smaller businesses seems rather counter-productive.
Disties, on the other hand, aren’t tied to specific products or vendors or markets, and as Ingram and Arrow have demonstrated, they have the ability to help VARs who may have lost one source of financing find another. And this is what we need to keep the wheels moving when business is slower than usual.