Facebook Powers Small Business Advertisers to Recovery and Growth by Helping Them Get Loans
Facebook has tied-up with lending partner Indifi to enable business loans for its small business advertisers The company announced the new initiative at a virtual event hosted in partnership with FICCI
New Delhi : Facebook India today announced a new program, the ‘Small Business Loans Initiative’, to help small and medium businesses (SMBs) that advertise on Facebook to get quick access to credit through independent lending partners. Indifi is the first lending partner that Facebook has tied-up with and the program is built with the potential to bring more partners on board. The goal of the initiative is to make business loans more easily accessible to small businesses, and reduce the credit gap within India’s MSME sector.
India is the first Facebook country where this program is getting rolled out. The program is open to businesses registered across 200 towns and cities of India.
Ajit Mohan, VP and MD Facebook India, said at the launch event, “Facebook is deeply committed to creating economic opportunities for India’s small businesses. Access to timely capital is more important than ever as it can help them jump-start their recovery and drive big growth. The country has made tremendous progress in the last few years in expanding access to credit. As a company, we are at the spear end of the digital transformation and we believe that the Small Business Loans Initiative can provide big impetus to early entrepreneurs to fuel their ideas and their appetite for taking risks.”
The announcement came at a virtual event – ‘Enabling MSME Growth through Financial Inclusion’- hosted by Facebook India in partnership with Federation of Indian Chambers of Commerce & Industry (FICCI). The event also saw Niti Aayog’s Chief Executive Officer, Amitabh Kant, deliver the keynote address.
Amitabh Kant, Chief Executive Officer, Niti Aayog said in his keynote address, “MSMEs will play a significant role in reviving India’s economic growth and achieving its vision of becoming more self-reliant. Digital transformation will act as a catalyst for India’s development story going forward, and access to finances will be crucial to this transformation. In this context, Facebook’s Small Business Loans initiative is a big step in the right direction and I’m happy to note that India is the first country where the company is launching such an initiative.”
Uday Shankar, President, FICCI said, “FICCI lauds Facebook efforts of empowering the MSME sector with the right opportunities, skills, and solutions. FICCI has always advocated for stronger private sector participation for the growth of India’s MSMEs and welcomes the launch of Facebook’s Small Business Loans Initiative to make access to credit more easily available to the industry. We look forward to collaborating with Facebook over the coming months to develop programs and solutions that can provide an impetus to the sector.”
According to the ‘Future of Business’ survey conducted by Facebook in collaboration with OECD and the World Bank last year, almost a third of operational SMBs on Facebook in 2020 said that they expected cash flow to be one of their primary challenges. Getting access to timely credit is particularly challenging for micro and small businesses that have just started out and might not have a long credit history.
High and floating interest rates might deter a lot of small businesses from applying for loans. Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans at a predefined interest rate of 17%-20% per annum. The program will also enable small businesses to apply for loans without collateral through a quick online application. Small businesses applying under this program will not be charged a processing fee by Indifi. Indifi will also disburse the loan amount within five working days of the borrower completing all documentation formalities after acceptance of the offer by Indifi. Many small businesses face challenges in securing loans of lower ticket-size as they are not viable for many lenders. Through this program, small businesses can get loans between INR 5 lakh and – INR 50 lakh.
Facebook is also committed to enabling opportunities for women-led businesses in India to thrive and grow. Small businesses that are wholly or partly women-owned can get a special 0.2% reduction per annum on the applied loan interest rate from Indifi.
This first-of-its-kind India-first initiative is yet another step by Facebook to create a strong ecosystem for small businesses growth in the country. The program is a completely not-for-profit arrangement with Facebook’s lending partners and small businesses are not obligated to spend their loan amount on Facebook advertising.
In the last one year, Facebook has taken numerous steps to support the economic recovery of small businesses. Some of these include offering grants to small businesses, and expanding the company’s industry-leading skilling initiatives to support the offline to online journeys of small businesses. With the Small Business Loans Initiative, Facebook hopes to further catalyze the growth of micro, small, and medium enterprises in India.