Trial in 2013
As discussed in the previous part of the series, Intuit (INTU) will launch a $100 million fund to offer loans to small businesses. This is not the first time Intuit has ventured into the lending space. Over the last two years, the service provider has been offering loans worth $200 million to its QuickBooks customers.
Though the small business customers have benefited a great deal from the loans extended by Intuit, the demand for these loans is not very high. The high annual interest rates of around 30% is way higher than the rate of 5%–6% being charged by the banks.
Intuit’s new program will offer terms of up to one year, payments deducted on a weekly basis, and reduced rates to 8%–19% for customers with good credit history.
Intuit plans to divest its businesses
In August 2015, Intuit announced its plans to divest its business segments and focus on the cloud segment. Intuit stated that it will divest its Demandforce, QuickBase, and Quicken business operations. This will make TurboTax and QuickBooks the company’s main products. Online versions of both products are growing at a rapid pace.
US TurboTax Online’s units rose 11% and QuickBooks’ subscribers rose by 57% in fiscal 2015. QuickBase is a collaboration solution. Demandforce is a cloud marketing product. Quicken is personal finance software. Market leaders in the cloud segment include tech heavyweights like Amazon (AMZN) Microsoft (MSFT) and IBM (IBM).
You can get diversified exposure to Intuit by investing in the First Trust ISE Cloud Computing Index ETF (SKYY). It holds 0.79% of the stock.