Facebook India launched a new program titled the “Small Business Loan Initiative” in collaboration with online lending platform Indifi, to support small and medium businesses (SMBs) that advertise on Facebook’s network in securing credits with ease using independent lending partners.
India is the first country to get access to Facebook’s “Small Business Loans Initiative” and is offered to companies registered in over 200 Indian towns and cities. Indifi is Facebook’s first financing partner, and the program is structured with the possibility of adding more partners in the future. Facebook stated that it would benefit the Indian small business economy by allowing these businesses to use its platforms such as Instagram and WhatsApp to expand their reach.
Small businesses that have advertised on Facebook or its group apps for at least 180 days are qualifying for the loans. In addition, the program may encourage more of these businesses to advertise on the social media platform as well as its apps, which are remarkably popular in India. With over 410 million users, India is a significant growing space for Facebook, and its WhatsApp messenger ranks India as its fastest-growing market with over 530 million users. In India, Instagram has over 210 million users and has benefitted immensely from a ban on TikTok, a Chinese short video platform, last year.
Ajit Mohan, Vice President and Managing Director of Facebook India, told the media outlets that the loan, which comes with a pre-determined interest rate of 17-20 percent and therefore is repayable in five days, and requires no security deposits or processing fee by Indifi. There is also a 0.2 percent interest rate concession for women-led firms.
The initiative follows Facebook’s announcement in September 2020 of a $100 million Facebook Business Grant spanning 30 countries, including India. For the businesses impacted by the pandemic, over $4 million was allotted to 3,000 Indian SMBs among five cities: New Delhi, Gurgaon, Mumbai, Hyderabad, and Bengaluru.
While the initiative was developed in collaboration with Facebook, Indifi will be in the charge of approving loans as well as loan recovery. Though there is no limit on the number of loan approvals for businesses, Mohan estimates that other players will engage in and that more capital will be accessible in the market. Many small businesses experience challenges acquiring smaller-ticket loans because they are not considered trustworthy by many lenders. Small businesses can secure loans with ease ranging from Rs 5 lakh to Rs 50 lakh through this program.