It was a little over a year ago that I last talked about software financing (“Why software financing makes sense” – April 2015), but I was reminded again recently why this topic can be so important for many companies.
I was talking to a new client of ours, and indeed, we financed software for her company. Specifically, an ERP system. She was very appreciative, and remarked how she found us specifically after searching for someone who finances software. You see, she was having trouble, and the bank really wasn’t any help.
The loan officer even mentioned that since software wasn’t tangible, it couldn’t be used as collateral for the loan, and without collateral, either something else was needed, or no loan. The company had good credit and solid financials, but their building was leased, their truck had a finance lien, and the bank wasn’t interested in their machinery or equipment (and the company really didn’t want to put that stuff up either). So no loan.
Then our new client asked colleagues – none of them knew anyone who would “finance” software. It seemed like it was a question without an answer.
But hey, this is 2016, and if you have a question or want something, what do you do? You Google it. She did, she found my company, and the rest is history.
For the life of me, I don’t understand why financing software is such an issue. You can buy software on a credit card, right? You can even get your website designed using one if the design company accepts credit cards (many do). So technically, any bank that issues cards in their name does finance software and other “intangible” things like websites.
Bottom line – if a company has good credit and solid financials, there’s no reason they shouldn’t be able to borrow money for software. Many larger ERP systems and similar are expensive, and they are as important as any machine in the building – sometimes, more important, depending on the industry.
Our new client was pleasantly surprised, and I’m happy about that, but really, it shouldn’t have to come to that in 2016 (but then again, I’m glad it does!)