With bank lending still tight, and continuing uncertainty in the economy, more and more IT companies are scrambling for capital.
EasyTech Finance, a new specialty lending company, is aiming to fill that lending gap, helping IT resellers raise financing in a tough market.
After a soft launch last year, EasyTech, part of the bigger EasyBizFinance, plans to make an aggressive push into IT lending this year.
For a small establishment fee - typically about $2,500 - EasyTech Finance will help arrange loans on behalf of IT resellers of up to $15 million, reaching out to a panel of lenders, said Matt Maley, a senior executive with EasyTech.
EasyTech has relationships with 31 lenders through which it plans to raise financing for various types of working capital funding needs of IT resellers, said Maley.
It has been a tough year for financing in 2012 with banks more focused on margins and volume play, and further tightening their credit policies, he noted.
“Traditional lenders don’t have the appetite and won’t take the risk” associated with technology lending, he said.
EasyTech is targeting over 20 different loan products that range from trade financing; debtor finance, which includes helping companies in voluntary administration; cash-flow based financing and receivables finance, supply chain finance, and restructuring finance. Loans could range from $250, 000 to $15 million, said Maley.
EasyTech has thus far lent about $510 million to over 900 small to medium-sized enterprises. It plans to further lend up to $1.2 billion in the next three years, he said. Unlike bank lenders, EasyTech aims to take a holistic view of the company’s credit situation, taking into account their cash flow, rather than just mandating property as collateral and putting up the company’s inventory as security.
That type of lending often leads to locking up resellers’ personal assets and inventory as collateral, putting a further squeeze on the smaller resellers’ ability to make meaningful investments or to meet day-to-day capital needs, Maley noted.
Finding loans through traditional bank route also typically takes up to several weeks. EasyTech plans to cut that time by half, tapping its existing relationships it has with a group of lenders that include superannuation funds, pension funds, and certain private funds in Asia. It is also in the process of raising its own private fund, Maley said.
EasyTech is also in talks with certain disties to help them extend credit to their resellers partners rather than turning away reseller needs because of a riskier loan, he added.
Arranging the loan through a group of lenders ensures the credit risk is spread across lenders, making it possible to raise a larger amount that would otherwise be difficult to raise from a single lender, in addition to being time-consuming for a reseller to arrange on its own.
Maley previously led a similar effort at Vantex Technology Distribution, which was purchased by Ingram Micro in 2009 in an effort to expand its market share.