New Delhi, 20 Aug 2021: Facebook India announced an initiative known as the ”Small Business Loans Initiative” in partnership with Indifi to help small and medium businesses (SMBs) get quick access to credit through independent lending partners.
India is the first country for Facebook where this program is getting rolled out. The program is open to businesses registered across 200 towns and cities of India.
Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans between Rs 5 lakh ($6,720) to 50 lakh ($67,200) at a predefined interest rate of 17-20 percent per annum, and applicants will not be charged a processing fee.
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. Small businesses that are wholly or partly women-owned can get a special 0.2 percent reduction per annum on the applied loan interest rate from Indifi.
The goal of the initiative is to make business loans more easily accessible to small entrepreneurs, and reduce the credit gap within India”s MSME (micro, small and medium enterprises) sector, Facebook India Vice-President and MD Ajit Mohan told reporters in a virtual briefing.
He emphasized that there is no revenue share for Facebook in the program and that SMEs will have no obligation to spend the loan proceeds on Facebook.
Mohan also noted that all decisions related to the loans including approval, disbursement and recovery will be made by Indifi (and other lending partners as they join).
He added that Facebook is providing the connection between the lender partner and the SME and adding structure in terms of interest rates.
About 200 million businesses use Facebook apps every month across Facebook, Instagram and WhatsApp and a significant share of that is in India.
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 SMEs on Facebook in 2020 said 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.
Mohan said the private sector can play a pivotal role in enabling innovative and credible models that offer seamless and timely access to funding for the MSMEs in the country.
FICCI President Uday Shankar said the industry body has always advocated 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,” he added.
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.
As part of its USD 100-million global grant, Facebook deployed more than USD 4 million in India for more than 3,000 small businesses across the five cities that it operates in.
Niti Aayog CEO Amitabh Kant, in a video message, said one of the most critical aspects for India’s integration into the global value chains is by making industries more globally competitive.
“COVID-19 has given industries the opportunity to roll out industry-wide technology transformation programs. This is key to being able to compete on a global stage.
“The government is committed to creating an enabling environment for MSMEs in the private sector to thrive, the private sector also will have to work together to help the various MSMEs across the value chain, adapt to the latest technologies and new business processes,” he added.