Facebook, Indifi partner to provide easy, collateral-free loans to small businesses
Facebook India on Friday said it launched a ‘Small Business Loans Initiative’ programme, where it has partnered with fintech lending startup Indifi to help small and medium businesses (SMBs) avail of easy, collateral-free loans.
Through this partnership, SMBs that advertise with Facebook can get loans at a predefined interest rate of 17-20 percent per annum without collateral through a quick online application. First launched in India, the initiative is open to businesses registered across 200 towns and cities.
The social media giant said it will onboard more independent lending partners in the coming days to make business loans more easily accessible to SMBs — between Rs 5 lakh and Rs 50 lakh — to reduce the credit gap within India’s MSME sector.
SMBs applying under this programme will not be charged a processing fee by Indifi. It will also disburse the loan amount within five working days of the borrower completing all documentation formalities after Indifi accepts their offer.
In fact, 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.
During the launch, Ajit Mohan, VP and MD, Facebook India, said,
“Facebook is deeply committed to creating economic opportunities for India’s small businesses. Access to timely capital is more important than ever as it can help them jump-start their recovery and drive big growth."
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), where Niti Aayog CEO Amitabh Kant also participated.
Uday Shankar, President of FICCI, said, “FICCI has always advocated for 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 programmes and solutions that can provide an impetus to the sector.”
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 SMBs on Facebook in 2020 said that 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 and might not have a long credit history.
Delivering the keynote address, Amitabh Kant, CEO, Niti Aayog, said,
"MSMEs will play a significant role in reviving India’s economic growth and achieving its vision of becoming more self-reliant. Digital transformation will act as a catalyst for India’s development story going forward, and access to finances will be crucial to this transformation. In this context, Facebook's Small Business Loans initiative is a big step in the right direction, and I’m happy to note that India is the first country where the company is launching such an initiative.”
This first-of-its-kind initiative — a completely not-for-profit arrangement with Facebook’s lending partners — will create a strong ecosystem for small businesses growth in the country. Moreover, SMBs are not obligated to spend their loan amount on Facebook advertising, it said in a statement.
In the last year, Facebook has taken numerous steps to support the economic recovery of SMBs like offering grants to small businesses and expanding the company’s industry-leading skilling initiatives to support the offline to online journeys of small businesses.
Edited by Suman Singh