The Bank of IBM: Open for Small and Medium Businesses

SMBs comprise nearly 65 percent of global GDP, account for more than 90 percent of all businesses, and employ over 90 percent of the world’s workforce. As such, SMB growth is crucial to the global economic recovery. But, as anyone that’s every run a small business knows, lack of financing often gets in the way of business growth. In fact, the U.S. Small Business Administration (SBA) indicates that more than 50 percent of small businesses fail within their first five years because they lack capital. And we’ve all heard how tough it is for SMBs to get a business loan from the likes of Bank of America, JP Morgan Chase and Citibank.

But in September, IBM Global Financing launched a $1 billion initiative to provide financing for SMBs who need new IT solutions to help grow their businesses. At IBM’s Mid-market Influencer Summit, held last week in New York, I had a chance to talk to Tom Higgins, Director, WW General Business & Channels Sales for IBM Global Financing, and Ed Abrams, VP of IBM Global Midmarket, to learn more about it.

Big Blue’s Big Green Program

IBM Global Financing isn’t new. The organization is the world’s largest IT financier with over 125,000 clients in more than 50 countries. What is new is that IBM has made $1 billion in financing available specifically to help credit-qualified SMBs acquire new technology solutions.  The program stems from conversations with channel partners, who told IBM that their customers often wanted to invest in new solutions to help make their businesses more productive and profitable, but lacked access to financing for these solutions.

With this initiative, IBM hopes to help SMBs get the technology that they need to streamline their businesses and drive growth.  Some of the key features that make this program attractive include:

  • Minimums start at $5,000 U.S. with a 0% payment plan for 12 months–making the program relevant even for small businesses.
  • IBM business partners sell the financing. These business partners can size the solution and financing required to individual customer requirements, and execute the contract via IBM’s Rapid Online Financing widget.
  • Credit-qualified SMBs can often get an approval in less than 60 seconds.
  • Financing options range from simple loans to tailored leases to total solutions including hardware, software and services (both IBM and non-IBM) in one contract with one predictable monthly payment.
  • IBM is rolling out the program on a worldwide basis.

This financing initiative goes hand-in-hand with IBM’s 34 “cost-buster” solutions (which IBM originally announced in June) and are designed and pre-configured to help solve SMB business problems. Cost-buster solutions focus on helping SMBs to:

  • Gain better insights from data
  • Create innovative products and services
  • Connect and collaborate
  • Squeeze costs from IT infrastructure management
  • Integrate and manage different functional areas and solutions
  • Manage risk, security and compliance

Fuel for the Engines of a Smarter Planet

Many SMBs have these and/or related challenges, resulting in a gap between in where their business is today and where it needs to be. In our 2011 SMB Group 2011 Routes to Market Study, SMBs indicated that their top business challenges include attracting new customers, growing revenue and maintaining profitability. Meanwhile,  top technology challenges are containing IT costs, implementing new solutions or upgrades and keeping their systems up and running (Figure 1).

Figure 1: (click to enlarge)

Source: SMB Group 2011 SMB Routes to Market Study

As important, SMB Group studies–along with those we see from other research and analyst firms–tell us time and time again that SMBs that invest more in technology are dramatically more likely to achieve and expect higher revenue growth than counterparts that are more conservative in this area. For instance, as shown in Figure 2, 81% companies investing more in technology expect revenues to rise in the next 12 months, while only 34% of companies that are decreasing IT spending expect revenues to rise.

Figure 2: (click to enlarge)

Source: SMB Group 2011 SMB Routes to Market Study

Anyone that listens to NPR has heard IBM’s “Midsize Businesses are the Engines of a Smarter Planet” slogan. Technology–applied in alignment to business objectives–increasingly provides the fuel to achieve and sustain business success. In a time where financing alternatives are scarce, IBM’s financing programs provide a new way for SMBs to get the capital they need to move the business forward.

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