Social media giant Facebook on Friday announced an initiative to help small and medium businesses (SMBs) access credit through independent lending partners. The programme titled ‘Small Business Loans Initiative’ will be rolled out with the help of the online lending platform Indifi. Notably, India is the first country where the US-headquartered social media giant is launching the programme.
The credit facility will be available to registered businesses across 200 towns and cities of India. While Indifi is the first lending partner for the programme, Facebook aims to bring more such players for the initiative.
The initiative was announced at a virtual event “Enabling MSME Growth through Financial Inclusion,” hosted by Facebook India in partnership with the Federation of Indian Chambers of Commerce & Industry (FICCI).
Interest rate of 17-20%
Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans between Rs 5 lakh and Rs 50 lakh at a predefined interest rate of 17-20 per cent per annum and applicants will not be charged a processing fee by Indifi. The lender will also disburse the loan amount within five working days of the borrower completing all documentation formalities.
What Facebook said
Facebook India vice-president and MD Ajit Mohan told reporters in a virtual briefing that 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.
“It is going to be an arm’s length relationship with reputable and reliable lenders, but within the construct of a programme that has been co-designed with Facebook. Indifi is the first lending partner and the idea is that as we scale, others can follow,” he added.
He emphasised that there is no revenue share for Facebook in the programme, 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.
What FICCI said
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,” Shankar added.
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