Facebook India has announced a new program to aid small and media-scaled businesses get quick credit.
The social media giant’s ‘Small Business Loans Initiative‘ will help small and medium businesses (SMBs) that advertise on Facebook quickly access credit through independent lending partners. Lending partners? At launch, Indifi is the first lender Facebook has partnered with, and the program is designed to add more lenders in the future.
The initiative’s goal 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 country where this program is rolling out, so Facebook is a new initiative. The program is open to businesses registered across 200 towns and cities of India.
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Almost a third of operational SMBs on Facebook in 2020 said that cash flow would be one of their primary challenges, according to the ‘Future of Business’ survey conducted by Facebook last year in collaboration with the OECD and the World Bank. Access to timely credit can be particularly difficult for micro and small businesses that are just starting out and do not have a long credit history.
As part of Facebook’s partnership with Indifi, small businesses that advertise on Facebook can apply for loans at a predefined interest rate of 17%-20% per year. Small businesses will also be able to apply for loans without collateral through a quick online application process. Indifi will not charge small enterprises to using under this program a processing fee.
Indifi will also disburse the loan amount within five working days after the borrower has completed all documentation requirements. Many small businesses find it difficult to obtain loans of lower ticket sizes as they are not viable for most lenders. Small businesses can apply for loans in this program between INR 5 lakh and – INR 50 lakh.
Additionally, Facebook is committed to enabling women-led businesses in India to thrive and grow. Businesses owned by women can receive a discount of 0.2% on the interest rate applied to their loans from Indifi if they are wholly or partly owned by women.
The social media giant also mentions that the program is a not-for-profit arrangement with Facebook’s lending partners. This also means that small businesses are not obligated to spend their loan amount on Facebook advertising.