Virendra Pandit
New Delhi: India has become on Friday the first country where Facebook rolled out a new program, known as the “Small Business Loans Initiative”, in partnership with online lending platform Indifi, to assist small and medium businesses (SMBs) that advertise on the social media giant to get quick access to credit through independent lending partners.
The initiative is targeting SMBs registered across 200 towns and cities of India. Indifi is the first lending partner to have tied up with FB which aims to bring more lending partners on board to make loans easily accessible to the SMBs and reduce the credit gap in the MSME sector.
In association with the Organization for Economic Cooperation and Development (OECD) and the World Bank, Facebook’s 2020 survey on the “Future of Business” found that nearly a third of operational SMBs on the social media platform said that cash flow was one of their primary challenges. Access to timely credit has been challenging for newly-started micro and small businesses having no long credit history.
Now, the small businesses advertising with Facebook will be eligible to get loans at a predefined interest rate of 17-20 percent per annum. The program will also enable SMEs to seek loans without collateral through a quick online application, Ajit Mohan, Vice-President, and Managing Director, Facebook India, said.
“Facebook is deeply committed to creating economic opportunities for India’s small businesses. Access to timely capital is important as it can help them jump-start their recovery and drive big growth…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 appetite for taking risks.”
The initiative was announced at a virtual event “Enabling MSME Growth through Financial Inclusion,” hosted by FB India in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI) in the presence of Niti Aayog’s Chief Executive Officer Amitabh Kant.
Lauding the effort, FICCI President Uday Shankar said it would empower the MSME sector with the right opportunities, skills, and solutions. He said FICCI has always advocated for stronger private sector participation for the growth of India’s MSMEs.
Indifi will not charge a processing fee on small businesses applying under this program. It will also disburse the loan amount within five working days of the borrower completing all documentation formalities after acceptance of the offer made by the lending firm.
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 will be able to avail of loans between Rs. 5 lakh and Rs. 50 lakh. Indifi will also provide small businesses wholly or partly women-owned a special 0.2 percent per annum discount on the applied loan interest rate.
Mohan said that Facebook will not monetize this partnership, and help connect small businesses with Indifi. The businesses will have no obligation to advertise on Facebook or its companies.
Facebook has taken steps in the last year to support the economic recovery of small businesses by offering grants and expanding the company’s industry-leading skilling initiatives to support the offline to online journeys of small businesses.