IBM's financial arm reaches out to small, medium businesses

The Business Line, March 26 2012

With credit hard to come by for small and medium businesses, IBM's financing arm plans to extend its reach across India.

To fund the next Fortune 1000 companies out of India, IBM is planning to reach out to companies in tier -2 and -3 cities. IBM is opening its credit lines to small businesses that can acquire interest-free financing through IBM Global Financing. This credit will be extended to companies that are looking to lease or buy IT equipment – PCs, servers or investments in IBM equipment or related software.

Mr Sapan Jain, Vice-President, IBM Global Financing, India/South Asia, told Business Line: “With this initiative, IBM wants to extend its financing into cities where we did not have our financial offerings.”

However, IBM will not be extending credit to non-technology related things, which puts it directly in competition with banks and other lending institutions. SMBs are keen to expand their businesses and their technology needs are growing but due to unavailability of credit they often put their plans in the backburner.

This won't be restricted to IBM technologies or solutions and the working capital would be provided for 30–90 days after due diligence on the company is done.

These companies should have a two-year work history, with complete financials, their payment behaviour will be analysed and weightage would be given for customers who have used IBM products or solutions before,” said Mr Jain.

Industry watchers say that with initiatives like these, IBM is trying to give a considerable push to its struggling financial business.

According to its 2011 annual report, in 2000, the financing business contributed $3.3 billion in revenues and in 2011 this increased a mere 8 per cent to $3.6 billion.

IBM Global Financing has an asset value of $34 billion and lends to 1.25 lakh businesses.