Facebook facilitates loans for SMEs that advertise on its platforms

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Social networking giant Facebook announced on Friday an initiative to help small businesses that advertise on its Facebook, Instagram and WhatsApp platforms in India get easier access to credit from reputable lenders.

The American company said it initially partnered with Indifi Technologies and will bring more lenders on board to provide loans to small businesses ranging in size from 5 to 50 rupees on its platforms.

This will help meet the urgent need for working capital among small businesses in India, especially after the Covid-19 pandemic. Facebook said over a third of the small businesses it spoke to said they had problems accessing working capital.

“We’re creating a program with a construct that takes great advantage of our relationships and the large number of small businesses represented in our apps, and translates that into a program that addresses many of the obstacles and complaints that have long been problematic for small businesses Time, ”said Ajit Mohan, Vice President and Managing Director of Facebook India.

Facebook said it would maintain a customary distance from lenders who provide collateral-free business loans to small businesses. Its role in the program is to set the rules for lenders who must disburse loans within five days of completing the application process, with the interest rate capped between 17 and 25% while the size of the loan can be between Rs 5-50 lakh.

“… it will be a business relationship with reputable and reliable lenders, but under a program jointly developed with Facebook,” added Mohan.

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Facebook added that women-run businesses will receive a 0.2% annual discount on the applied lending rate.

Unlike loans that companies access through other ecommerce platforms like Flipkart and Amazon, Facebook said companies won’t be tied to spending the capital on their own platforms, with the company claiming the initiative is entirely nonprofit is.

Mohan added that only 10% of the 200 million companies worldwide using its platforms advertise on it. The aim of the initiative to make credit possible is like many others to help these companies to grow and ultimately to advertise on their platforms if they see value in it, and thus to promote more business for the company.

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