If a car owner doesn't pay back his car loan, the repo man usually arrives in the dark of night to take back the automobile. If a homeowner defaults on his mortgage, the bank forecloses on and seizes the house. The car and the house serve as the collateral for the financing organization-they can be cleaned up or cleaned out, as it were, and resold. But what if a company defaults on a loan for a multimillion-dollar SAP ERP software purchase? Or can't repay IBM Global Financing for the hardware, software and services that it bought two quarters ago?

Does a Repo Man sneak into the data center and take back the servers and installation CDs?

As it turns out, hardware is just like a four-bedroom house in Houston or 2008 Toyota Camry: It can be "repo'ed," refurbished and resold by the vendor or, perhaps, put out on eBay. "We can take back equipment," says Fred Clarke, a spokesman for IBM Global Financing. "We can refurbish and resell them on IBM.com or through a broker network, and really recapture the residual value on that equipment."

Software, though, is not as tangible as a mainframe: Software cannot be resold and has no collateral value. "Software is pretty much a loan," says Clarke. "There's nothing you can do with software once you've taken possession of it."

Tech vendors offering their own financing, such as IBM, Oracle and Cisco, and those that rely on financing partners, such as Microsoft, could soon start to see red numbers associated with their customer financing deals. That's because defaults on technology loans, which allow customers to purchase computers, software and other tech gear, have spiked this year, The Wall Street Journal recently reported. One financing company told the Journal that businesses are now defaulting on loans for tech purchases "all the time."

Nearly half of businesses' capital spending is on IT products, and companies and governments annually spend almost US$1.8 trillion on technology, according to a recent New York Times article.

Therefore, a sharp increase in IT-related defaults, combined with even deeper cuts in businesses' IT spending, could have disastrous economic consequences.

For the software vendors, in particular, the "repo" recourse is of negligible value. "If a customer defaults, Microsoft Financing and its finance partners may take the appropriate legal action, on a case-by-case basis," writes Laurinda Hoffman, who works for Microsoft's public relations firm, via e-mail. (Microsoft Financing is not a financial services company; the software giant uses third-party underwriters to determine customers' credit-worthiness and to facilitate loans.)