Social media giant Facebook India on Friday announced a lending initiative to help small and medium businesses that advertise on its platform to get quick access to credit through independent lending partners. The company said India is the first country to see the roll-out of the ‘Small Business Loans Initiative’.
Ajit Mohan, VP and MD Facebook India, said access to timely capital is more important than ever as it can help small firms jump-start recovery and drive growth. 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, he added.
“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 said.
Mr. Mohan said that all decisions related to the loans — including approval, disbursement and recovery — would be made by lending partners, and Facebook would provide the connection between the lender partner and the SME.
He added that about 200 million businesses use the group’s apps every month across Facebook, Instagram and WhatsApp and a significant share of that is in India.
Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans between ₹5 lakh and ₹50 lakh at a predefined interest rate of 17-20% per annum and applicants will not be charged a processing fee by Indifi.
Indifi will also disburse the loan amount within five working days of the borrower completing all documentation formalities after acceptance of the offer by Indifi.
Small businesses that are wholly or partly women-owned can get a special 0.2% reduction per annum on the applied interest rate from Indifi.