Facebook is planning to help small and medium-sized businesses in India through a new program. With the help of this new program, these businesses will be able to secure loans in the South Asian market as the company will extend its support for increasing its presence among merchants. The new program will be called Small Business Loans Initiative and will tackle some important obstacles faced by small businesses when applying for loans.
Facebook had announced a $4.3 million grant for small businesses in India last year. The new program will provide its lending partners to issue small-ticket loans that range from Rs. 5,00,000 and Rs. 50,00,000 with 17% to 20% interest rate per annum. Businesses run by women will have a 0.2% reduction in interest rate. The loans won’t require any collateral or joining fee. The primary lending partner of the program is CDC Group-backed Indifi. The businesses can get the loan within five working days after completing all necessary documentation formalities.
Facebook is promoting this lending program and Facebook India Head Ajit Mohan clarified that small businesses in 200 Indian cities can make use of the program from today. This program will not be monetized by the company. Ajit added that “We believe it is in our self-interest for there to be a massive growth in the small business ecosystem in India because as a company we are playing this for the long term. We will disproportionately benefit because a lot of these small business activity happens on our apps as they grow.”
He said “We are not looking to make money from this program. We don’t have any revenue sharing agreement. We are not putting any constraint on how this money is spent.”
Facebook has been repeatedly helping small businesses in India. It has also invested in Jio Platforms for ensuring the digital transformation of small businesses in the country. Amitabh Kant, chief executive of Niti Aayog, said at a virtual conference Friday that “MSMEs will play a significant role in reviving India’s economic growth and achieving its vision of becoming more self-reliant. 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 and I’m happy to note that India is the first country where the company is launching such an initiative.”