Social media giant Facebook has expanded into the financial services space with the launch of Small Business Loans. The programme will offer small and medium businesses loans ranging from Rs 5 lakh to Rs 50 lakh in 200 towns and cities in the country.
India is the first country where the programme is being rolled out. Facebook has teamed up with Indifi, a Gurgaon-based digital lending platform, and is open to bringing in more partners on board.
As part of the programme, small businesses that advertise with Facebook can get loans at a predefined interest rate of 17-20 per cent per annum. Borrowers will not be charged a processing fee by Indifi and the loan will be disbursed within five working days after the completion of documentation formalities and acceptance of offer by Indifi. The programme will also offer loans without collateral.
Facebook in a statement on Friday said that a joint study of the social network platform in collaboration with the OECD and the World Bank last year identified cash flow as one of the primary challenges for small and medium enterprises. Access to timely credit is particularly challenging for micro and small businesses who do not have a long credit history.
“Access to timely capital is more important than ever as it can help them jump-start their recovery and drive big growth. The country has made tremendous progress in the last few years in expanding access to credit.
“As a company we are at the spearend of the digital transformation and we believe that the Small Business Loans initiative can provide a big impetus to early entrepreneurs to fuel their ideas and their appetite for taking risks,” said Ajit Mohan, VP and MD, Facebook India.
Facebook said the programme is a not-for-profit arrangement with its lending partners and small businesses are not obligated to spend their loan amount on Facebook advertising. The announcement came at a virtual event hosted by Facebook India in partnership with Ficci.
“We look forward to collaborating with Facebook over the coming months to develop programmes and solutions that can provide an impetus to the sector,” said Uday Shankar, president, Ficci.
