- Date : 15/02/2022
- Read: 3 mins
Cash flow is one of the biggest hurdles that small and medium businesses face in India. To help them overcome this challenge, Facebook started the "Small Business Loans Initiative" in August 2021.
In August 2021, Facebook, now Meta, kicked off a venture called the "Small Business Loans Initiative" to help small and medium entrepreneurs who advertise on the social media platform grow easily. Getting loans is one of the biggest difficulties these businesses face, and the programme aimed to do away with that challenge: SMEs can now receive credit from independent partners. For starters, Facebook India joined hands with Indifi, an online lending platform, to make loans available readily. In the long run, the aim is to narrow down the credit gap in the MSME sector in the country.
Interestingly, India is the first country where this initiative has been launched, and businesses spread across 200 cities and towns can benefit from it.
Cash flow continues to be a major hurdle for small businesses. Facebook India set up this programme to help smooth out the process of securing loans to SMEs who cannot reach out to big lenders. These enterprises can now get a loan starting from ₹5 lakh and going up to ₹50 lakh with an interest rate of 17 to 20 per cent per annum. To encourage women entrepreneurs, companies owned by them get an additional 0.2 per cent reduction on the interest rate. Indifi also enables businesses to apply with a quick application online without any collaterals.
During the programme's launch, Facebook India claimed that it wanted to provide economic opportunities to small businesses in India. The first big step in that direction is to make sure they get the capital they need for growth and expansion.
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As part of the "Small Business Loans Initiative", Indifi does not charge any processing fee to businesses and disburses loans within five days of completing documentation and acceptance of the offer. All decisions regarding loans are taken by the lending platform with little interference from Facebook India. It also does not monetise this partnership.
Indifi also helps businessmen ready their applications by providing them guidance on call.
During the launch of the initiative, Ajit Mohan, VP and MD, Facebook India had, said, "More than a third of the small businesses whom we spoke to said that cash flow was a big challenge for them. Access to timely capital is more important than ever as it can help them jumpstart their recovery and drive big growth. The challenges around securing credit and timely credit inspired us to design this programme."
Facebook hopes that small and medium businesses will make a name for themselves in the Indian and global markets.
The social media giant received a thumbs up from Amitabh Kant, the chief executive officer of NITI Aayog. "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," he said during the online virtual event, "Enabling MSME Growth through Financial Inclusion", where the initiative was launched last August.
In September 2020, Facebook announced a $100 million Business Grant for 30 countries, including India. Around 3,000 Indian SMEs hit by the pandemic received around $4 million. The "Small Business Loans Initiative" aims to take this commitment forward.
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