Is COVID-19 vendor financing for enterprise gear a good deal?

IT vendors are offering billions in financial aid to keep enterprise IT sales from being cancelled and partners afloat, but do they benefit customers?

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In the wake of coronavirus-related shutdowns that have wreaked havoc on the global economy, IT giants including Cisco, Dell, HPE and IBM have launched multi-billion-dollar financing programs for customers and channel partners. The programs offer financing with generous terms, such as zero interest and deferred payments until 2021, to help IT buyers weather the current cash crunch.

"These programs reflect something we knew would come down the pike. As cash flows dried up, cash reserves dried up, so businesses were in a cash crunch, not a credit crunch," says Carl Brooks, analyst, cloud transformation channel, with 451 Research. "For SMBs, it was an immediate issue. They suddenly found themselves unable to pay ongoing large expenses or the AWS bill,"

Even with government loans to keep companies afloat, these programs are a necessity, Brooks says. "[The vendors] are not looking at struggling partners. They are looking at businesses that were healthy" up until February of this year. "This is a real effort to keep customers they've got that might fall behind or not be able to do business. It's definitely not the time to turn customers away," he says.

And it's not only SMBs that need the help. Jim O'Grady, vice president of HPE Financial Services Global Asset Management, says many enterprises are using HPE's programs to make progress on large-scale projects that would have stalled otherwise. 

"Many businesses, large and small, are being extra diligent with spending, and our programs are helping. The [HPE] 2020 Payment Relief and Accelerated Migration programs have been especially useful. In addition to helping enterprise customers use their existing infrastructure to generate much-needed cash, the payment relief program pushes over 90% of the new technology expenditure into next year," O'Grady says.

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