According to a story in "The Wall Street Journal," Microsoft will increase the amount of money it lends to small businesses seeking to license its software in a bid to jumpstart sales during the current economic slowdown. The software giant will increase its small business loans by 60 percent this year, to $1.25 billion. Last year, Microsoft provided $780 million in financing to small businesses.
Microsoft's small business financing program is one of the under-appreciated aspects of the software giant's business, and the company says that propping up sales now is important since small businesses are having trouble getting credit elsewhere. "Information-technology buyers keep accelerating their leasing and financing, so we see this as a time when we can make a big difference by making things easier," Microsoft Financing general manager Brian Madison said.
Bad loans will likely increase as Microsoft extends new credit, putting the company at some risk. But looked at another way, its 2008 financing budget represents just 2 percent of Microsoft's expected revenues this year.