Earlier today, the Wall Street Journal reported that trouble is brewing in the high technology financing business.
It should come as no surprise that the default rate of high technology financing deals, 0.86% in September 2008 are roughly double what they were a year ago, according to the Equipment Leasing and Financing Association. This rate is about the same as the percentage of realestate loans expected to be written off by the top 100 banks in the USA. IBM, which finances their own software and hardware is experiencing slightly higher default rates – 1.1% in June and 1.3% in September.
IDC reports that financing accounts for 14% of the total $629 billion IT hardware and software market.
Lenders are tightening up credit criteria and increasing rates, despite very low prime interest rates. Some software vendors are insisting on 50% up front.
