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Microsoft (NASDAQ: MSFT) has come up with a canny way to increase its revenue during a recession. It will loan companies money to buy its software.

Redmond has always had a deft touch in bringing in more sales, and this is yet more proof of the firm’s endless inventiveness. According to The Wall Street Journal "With small-business customers finding it harder to finance high-tech purchases, Microsoft Corp. plans to increase the amount it lends them for purchases, by as much as 60%." That would bring the number up to $1.25 billion.

Microsoft earns so much money that even a decent default rate on the loans would not affect its earnings. The company already knows that.

The move raises an interesting question. If Microsoft can open a "bank" for customers, why shouldn’t Apple (NASDAQ: AAPL), Cisco (NASDAQ: CSCO), Oracle (NASDAQ: ORCL), and other big tech companies with strong balance sheets do the same thing? The answer is that nothing prevents them from making the same effort.

If a number of hardware and software operations move to give credit to their customers they will be, in effect, be creating "The First National Bank of Software Lending". At first blush, there is nothing wrong with it, But, the precedent of passing capital to customers to buy goods and services which in turn drives up revenue at the lender may not be a terribly good idea. Auditors are likely to question the true value of the sales that the practice brings into P&Ls and how the loans should be handled on the lender’s balance sheets.

Lending capital to the customer base may be fair play, but it is a fishy way to drive sales.

Douglas A. McIntyre