Jenny Pappas, VP of Marketing and Investor Relations
Seeking Old Friends With the New Economy in flames and financing in short supply, the time may be ripe to look up some old friends: distributors.
Distributors long have been a source of financial backing for resellers and integrators.
Now, some companies are offering special financing options for partners caught in the credit crunch. Westcon Corp. recently launched its I-Qualify (IQ) program, which offers credit lines of up to $250,000 to startup solutions providers.
IQ is available through the networking products distributors three units: Westcon Inc., Comstor and Voda One. A solutions provider who qualifies for IQ under one division automatically qualifies for the program under the other two units.
Help for Startups Westcons financing initiative targets solutions providers that have been in business for two years or less. The companys goal is to back young companies with experienced management that may not have the credit history to participate in other financing programs.
"The opportunity for us is new business opportunities with people who have a historically solid background in networking industry but do have credit challenges," says Jenny Pappas, VP of marketing and investor relations for Westcon Group. Startups "may not necessarily have all of the standard types of credit history" to successfully build a business, she adds.
Westcons financing options include letting a solutions provider establish a master account agreement, which allows for payments and disbursements through an escrow agent.
Westcon also lets solutions provider executives use their own net worth to secure a credit line through a personal guarantee of payment agreement.
Redrock Communications Inc., a two-year-old solutions provider specializing in Cisco gear, participates in IQ through Westcons Comstor division. Jim Nesbitt, VP of sales at Redrock, says his company works primarily with Comstors escrow program. He gives IQ the nod over other distributors escrow programs, which require resellers customers to sign over purchase orders to the distributors.
"The paperwork is seamless to the end user," Nesbitt says. "Of all weve seen, its the easiest [program] to use."