The company said Indifi is the first lending partner it has partnered with and the program is designed with the potential to attract more partners. He added that the aim of the initiative is to make business loans more easily accessible to small businesses and reduce the credit gap within the MSME sector in India.
India is the first country where this program is deployed. The program is open to companies registered in 200 cities and towns in India.
Ajit Mohan, vice president and general manager of Facebook India, said Facebook is deeply committed to creating economic opportunities for Indian small businesses.
âAccess to timely capital is more important than ever because it can help them start their recovery and generate strong growth. The country has made tremendous progress in recent years in expanding access to credit. As a company, we are at the forefront of digital transformation and we believe that the small business lending initiative can provide a big boost to early adopters to fuel their ideas and appetite for risk taking â , he added. Mohan said it would be an arm’s length relationship with the lenders.
âThe challenges of obtaining timely credit for small businesses prompted us to design this program. There will be no guarantee. It will be a quick disbursement process in five working days and there will be a predefined interest range of 17-20% per annum, he added.
The announcement came during a virtual event, âEnabling MSMEs Growth Through Financial Inclusion,â hosted by Facebook India in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI). The event also saw the general manager of Niti Aayog, Amitabh Kant, deliver the opening speech.
Uday Shankar, President of FICCI, said the industry body looks forward to working with Facebook in the coming months to develop programs and solutions that can give the MSME sector a boost.
According to the âFuture of Businessâ survey conducted by Facebook in collaboration with the OECD and the World Bank last year, nearly a third of SMEs operating on Facebook in 2020 said they expected cash flow is one of their biggest challenges.
The company said high, floating interest rates could deter many small businesses from applying for loans. Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans at a predefined interest rate of 17-20% per annum. Small businesses applying under this program will not be charged a processing fee by Indifi.Facebook said that through this program small businesses can get loans between Rs 5 lakh and 50 lakh.
The company said it was a completely non-profit deal with the lending partners, and small businesses are not required to spend their loan amount on Facebook advertising.