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IBM offers financing for on-demand era

IBM has announced a financing deal for its US e-business hosting customers that offers payments spread over a year and a line of...

IBM has announced a financing deal for its US e-business hosting customers that offers payments spread over a year and a line of credit held in reserve.

Total Usage Financing is "unique, because it's not just financing", claimed IBM Global Financing media relations manager Timothy Ohsann.

"Unlike the normal two-year or three-year lease kind of finance, this is a lease plus an available line of credit. This is the first time we've offered this to customers, as opposed to business partners," he said.

Customers can use the credit to buy IT products from IBM "and, possibly, other people", Ohsann said. "When they find they need extra servers, for example, they don't need to go and ask for the money, wait for credit checks and so on because it's been prearranged."

Repayments will be spread across a 12-month period and will be tied into the existing lease charge. Interest rates will vary, with volume customers being offered preferential rates. The interest rate on the line of credit will be higher than that for the lease, Ohsann said, because it is a different type of loan.

At present the offer is only available to US customers, but it is likely to be rolled out to other countries.

Ohsann said more than a tenth of IBM's annual profit comes from the Global Financing operation.

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