IBM Earmarks $1 Billion For SMB Tech

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IBM will lend as much as $1 billion to creditworthy small and midsize businesses (SMBs) that buy or lease its technology during the next 18 months, the company announced Thursday.

Ed Abrams, IBM's VP of global midmarket, said the financing will cover 29 IBM products and services tailored for SMBs, including analytics, cloud, security, collaboration, storage, and other technologies. The company is grouping the offerings under the heading Cost Busters on its website. The $1 billion will be administered by IBM Global Financing primarily through IBM's channel partners, which will be allowed to tailor product-and-service mixes for their SMB customers. Credit terms will vary based on credit rating, product-and-service mix, and other factors.

"We are committed to helping small and medium businesses grow," Abrams said in an interview. "We know that they have had challenges often in access to financing, and we believe that by providing the financing to these solutions, we're in a situation where we can help these companies drive growth and success."

Vendor financing is nothing new for IBM or other large tech firms: Apple, Dell, HP, Microsoft, and others all have credit arms. But the strategy, perhaps not surprisingly, appears to have broadened to other areas. Google, for example, recently began testing an AdWords credit card designed exclusively for keyword spending. Abrams said that from IBM's perspective, the trend is toward financing technology suites via its channel partners rather than doing so on an individual product or service basis.

"We want to be helpful to the way [SMBs] buy and use technology," Abrams said. "We absolutely are seeing a move to, and are committed to continuing to fuel financing solutions rather than piece parts."

IBM's financing program comes at a time when some SMBs are still struggling with tight credit from traditional lending sources. The latest Reuters/Paynet data, for instance, showed small business borrowing ebbing after two months of strong year-over-year increases. Abrams said the actual timing of IBM's announcement--on the same day President Obama is set to deliver a speech on jobs--is "pure coincidence" and not tied to increasing political rhetoric around the role of small businesses in the economic recovery.

According to Abrams, demand for capital to fund technology acquisitions was evident in working with IBM's channel network. "They absolutely see, based on their dealings with customers, that getting access to financing will be extremely helpful for them and for the businesses themselves," he said.

IBM has traditionally ignored the "small" in SMB in favor of midmarket companies with at least 100 employees. Abrams said the billion-dollar lending program doesn't necessarily change that focus, but noted that Big Blue isn't turning technology-oriented small businesses away.

"We're really not focused on the very small business here, but clearly there are a significant number of small businesses who are much more technology-savvy and technology reliant," Abrams said. "The offerings and the [financing] is absolutely as appealing to them as it is to the [midsize] business."

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