Facebook India announced on Friday a new loan program called the Small Business Lending Initiative in partnership with online lending platform Indifi to help small and medium-sized businesses (SMEs) advertise on Facebook for quick access to credit through independent credit partners.
India was the first country where Facebook introduced this program. It is open to companies registered in 200 locations in India.
Indifi was the first loan partner Facebook contacted and the program has the potential to attract more partners.
Facebook Loan program Benefits
The initiative aims to make it easier for small businesses to access corporate credit and reduce the credit gap in India’s SME sector, the tech giant said.
According to a way forward for Business survey conducted by Facebook together with the OECD and therefore the International Bank for Reconstruction and Development last year, nearly a 3rd of SMEs operating on Facebook said they expect cash flow to be one of their biggest challenges in 2020.
Timely access to credit is a particular challenge for micro and small businesses that are just starting out and may not have a long credit history.
Facebook’s partnership with Indifi allows small businesses that publicize on Facebook to urge loan program at a group rate of interest of 17-20% once a year . The program will also allow small businesses to apply for unsecured loans through a fast online application.
“Facebook is committed to creating economic opportunities for small businesses in India. Timely access to capital is more important than ever as it can help them kickstart their recovery and drive great growth… As a company, we stand at the forefront of digital transformation and believe that the Initiative Small Business Loans can help them become a huge boost for early entrepreneurs to advance their ideas and risk taking,” said Ajit Mohan, Vice President and General Manager of Facebook India.
The initiative was announced at the virtual event “Enabling SME Growth Through Financial Inclusion” hosted by Facebook India in partnership with the Federation of Indian Chambers of Commerce (FICCI).
FICCI Statement on Program
“FICCI commends Facebook’s efforts to equip the MSME sector with the right skills, skills and solutions. FICCI has always advocated greater private sector participation in India’s SME growth and welcomes the launch of the Small Business Loans Initiative on Facebook to make it easier for the industry to access credit.” said Udai Shankar, President of FICCI.
Many small businesses face the challenge of getting credit with smaller ticket sizes because it is not profitable for many lenders. Through this program, small businesses can borrow anywhere from 5 to 50 million rupees.
Over the past year, Facebook has taken steps to support small business recovery.