Giving credit to the channel

I couldn't help but notice two separate articles about the channel and the credit crunch today, one saying that the channel will not be affected, and another saying that it will.

If nothing else, the rampant speculation points to the fact that what's going on in the credit market, the recent wave of bank closings, and the massive government bailout is unprecedented. And at this point, I think that every journalist, blogger, and television commentator has at least once said that this is the biggest crisis since the Great Depression, so let's go ahead and get this over with. Yes, it is the biggest financial crisis since the Great Depression. Now that we've gotten that out of the way, let's take a look at how the channel will be affected.

Channel Insider's article, "No credit crunch in the channel", says there is still plenty of money in the channel credit system, and 80 percent of solution providers have the same or better access to credit than they did last year. A significant minority of providers work with third-party finance companies to provide financing to their clients, and the use of technology financing is on the rise.

CRN however, reports that solution providers are "bracing for credit crunch". The specter of customers losing their lines of credit is very real--although it hasn't happened yet in large numbers, we haven't seen the end of the crisis yet, and the $700 billion bailout of the mortgage industry isn't going to fix it overnight, if at all.

Because it is so unprecedented, it's hard for anyone to tell what's going to happen. Solution providers will get some benefit as more companies move towards outsourced solutions, but there's little doubt that credit will never be as loose as it once was, and this will especially hit small and midsize businesses that make up the bulk of most solution providers' client base.

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