Facebook has launched a new programme in India to support small and medium-sized businesses. As part of the initiative, the social media giant will help small businesses secure loan from Rs 5 lakh to Rs 50 lakh across 200 cities in India. The company has joined hands with Gurgaon-based Indifi, a lending platform, for loan disbursal.
The goal 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, Facebook India Vice-President and MD Ajit Mohan told reporters in a virtual briefing.
“It’s going to be an arm”s length relationship with reputable and reliable lenders, but within the construct of a programme that has been co-designed with Facebook… Indifi is the first lending partner and the idea is that as we scale, others can follow,” he added.
The loans initiative, Mohan said, is to address the challenge of access to credit faced by the small and medium enterprises (SMEs) in the country.
He emphasised that there is no revenue share for Facebook in the programme, and that SMEs will have no obligation to spend the loan proceeds on Facebook.
Mohan also noted that all decisions related to the loans – including approval, disbursement and recovery – will be made by Indifi (and other lending partners as they join).
Small businesses that are wholly or partly women-owned can get a special 0.2 per cent reduction per annum on the applied loan interest rate from Indifi.
“Access to credit continues to be one of the big important factors driving and impacting the growth of MSMEs. Independent research shows that Indian MSMEs face huge challenges in securing timely financing and that curtails the growth opportunities,” he said.
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 SMEs on Facebook in 2020 said 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 out and might not have a long credit history.
There are about 200 million businesses globally that use Facebook apps such as Instagram and WhatsApp every month to engage with customers, and a significant number of these businesses are from India.