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IBM tempts SMBs with more finance

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CIOL Bureau
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Eric Auchard



SAN FRANCISCO: IBM is making its office equipment financing program easier for small- and medium-sized businesses to use, reversing a long-standing policy that favored big business clients.



The world's biggest computer company said the program offers competitive market rates, a simple rate structure, and a credit approval process that promises, in most cases, contracts are delivered within one hour for deals of up to $300,000.



IBM had introduced the program late last year by offering financing of up to $100,000, but is now expanding the amount.



"They are making it a lot easier to do business with IBM," said Adam Braunstein, an analyst with Robert Frances Group in Westport, Connecticut, who follows IBM's financing business.



Braunstein said that the typical rates charged to people looking for a small business loan can be usurious. "It's better to finance with your own credit cards," he complains.



Under the IBM program, a customer with a typical credit rating seeking a $30,000 loan might expect to pay an interest rate of 8 percent on a three-year deal, an IBM spokesman said.



The financing is available not just on IBM equipment but also on non-IBM equipment. The program, known as IBM Financing Advantage, will be available in Australia, Canada, France, Germany, Japan, Britain and the United States, IBM said.



IBM Global Financing finished 2004 with nearly $36 billion in assets. While little-known outside the world of big business, it is the world's biggest financier of information technology equipment, outpacing rivals such as Hewlett-Packard Co., Dell Inc. and General Electric Co's. consumer finance arm, at least for technology funding.



Market research firm IDC projects that small and mid-sized companies will spend $360 billion on information technology in 2005, up about 6 percent to 7 percent over 2004.



"The small-business market is growing faster and spending at a more active clip than the corporate market," Braunstein said. "IBM is doing a lot more to attract small business."



In October of last year, IBM introduced a program it calls Express On Demand which pulls together IBM hardware, software and services into packages for building and running small business e-commerce sales sites or a company's internal operations such as e-mail or document archiving.

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