Cisco and Hewlett Packard Enterprise have made billions of dollars available to finance IT projects that enterprises have reluctantly put on hold to preserve capital during the COVID-19 crisis.
HPE was the first to offer customers financial help through a Payment Relief Program managed by HPE Financial Services. Cisco followed less than a week later with the Business Resiliency Program, announced April 14. Together, the tech financing programs make $4.5 billion available to partners or enterprise customers.
The companies' offerings are an effort to entice organizations to keep buying technology despite economic uncertainty during the pandemic. Many enterprises are struggling to remain in business in the face of office and store closures ordered by state governments trying to stop the deadly #COVID-19 virus from spreading.
Analysts at Moor Insights & Strategy said restaurants, airlines and hotels would take advantage of the programs more than other businesses. That's because those companies were hit the hardest by government orders for people to stay at home.
"Service-oriented businesses will likely take full advantage [of the financing]," Moor analyst Will Townsend said. Both programs offer businesses no payments and no interest in the first 90 days. After that, companies make monthly payments set at 1% of the loan's total through the end of 2020.
Cisco has a minimum deal size of $50,000, which indicates the vendor is targeting midsize enterprises and above, Townsend said. Cisco Capital, the company's financing arm, is managing the $2.5 billion program.
Starting in January 2021, Cisco would base customers' monthly payments on the total financed amount and the remaining time on the loan. All of the company's hardware, software and services are covered. Cisco will also finance up to 5% of partner-provided services, such as installation.
HPE's $2 billion finance program would base 2021 monthly payments at 3.3% of the total contract value, the company said. The special financing covers new technologies, including hardware and select software, software appliances, services and installation packages.
HPE is also offering to rent pre-owned HPE technology and new PCs for up to 12 months. The rental offer is for companies faced with a significant increase in work-from-home employees because of the crisis.
The impact COVID-19 has had on IT spending is significant and could get worse, IDC reported last month. Preliminary estimates show that government efforts to control the disease would cause IT spending in 2020 to drop by at least $500 billion from last year to $4.1 trillion.