Facebook India on Friday launched a “small business loan initiative” to help small and medium-sized enterprises (SMEs) in India.
India is the first country for Facebook where this program is deployed.
It will help small and medium enterprises (SMEs) that advertise on Facebook’s platform get quick access to credit through independent lending partners.
The program is open to companies registered in 200 cities and towns in India.
The aim 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, said the Vice President and Facebook India CEO Ajit Mohan to reporters during a virtual briefing. .
“It will be an arm’s length relationship with reputable and reliable lenders, but under a program that has been co-designed with Facebook…Indifi is the first lending partner and the idea is that at as we evolve, others may follow,” he added.
He pointed out that there is no revenue sharing for Facebook in the program and that SMEs will have no obligation to spend the loan proceeds on Facebook.
Mohan also noted that all loan-related decisions – including approval, disbursement and collection – will be made by Indifi (and other loan partners as they join).
He added that Facebook provides the connection between the lending partner and the SME and adds structure in terms of interest rates.
Mohan said about 200 million businesses use Facebook apps every month across Facebook, Instagram and WhatsApp, with a large share in India.
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 preset interest rate of 17-20% per annum and applicants will not be charged a processing fee by Indifi.
Indifi will also disburse the loan amount within five business days of the completion by the borrower of all documentation formalities after acceptance of the offer by Indifi.
Small businesses wholly or partly owned by women can benefit from a special reduction of 0.2% per annum on the interest rate charged on loans from Indifi.
“Access to credit continues to be one of the major factors driving and influencing the growth of MSMEs. Independent research shows that Indian MSMEs face huge challenges in securing timely finance, which which reduces growth opportunities,” he said.
According to the “Future of Business” survey conducted by Facebook in collaboration with the OECD and the World Bank last year, almost a third of SMEs operating on Facebook in 2020 said they expected the flow of cash flow are one of their main challenges.
Access to timely credit is particularly difficult for micro and small businesses that are just starting up and may not have a long credit history.
Mohan said the private sector can play a pivotal role in enabling innovative and credible models that provide transparent and rapid access to finance for MSMEs nationwide.
FICCI Chairman Uday Shankar said the industry body has always advocated for stronger private sector involvement in the growth of Indian MSMEs and welcomes the launch of the Small Business Lending Initiative of Facebook to make access to credit more easily accessible to the industry.
“We look forward to working with Facebook over the coming months to develop programs and solutions that can drive the industry forward,” he added.
Over the past year, Facebook has taken many steps to support the economic recovery of small businesses. Some of these include offering grants to small businesses and expanding the company’s cutting-edge skills initiatives to support small businesses’ offline-to-online journeys. 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 $100 million global grant, Facebook has deployed more than $4 million in India for more than 3,000 small businesses in the five cities where it operates.
Niti Aayog CEO Amitabh Kant in a video message said that one of the most critical aspects for India’s integration into global value chains is to make industries more competitive at scale. world.
“COVID-19 has given industries the ability to deploy industry-wide technology transformation programs. This is critical to being able to compete globally.
“The government is committed to creating an enabling environment for private sector MSMEs to thrive. The private sector will also need to work together to help different MSMEs along the value chain, adapt to latest technologies and new business processes,” he said. added.