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Social media giant Facebook India on Friday launched its small business loans initiative in partnership with Indifi for disbursing quick loans to young and small businesses advertising on its platform. The loans will be processed within five working days if borrower submits the documents, without requiring any collateral.
Facebook India MD Ajit Mohan said that the social media platform will be at an “arm’s length” from the actual lending process, and Indifi will be responsible for deciding eligibility criteria, lending money and managing risks. Facebook will be a facilitator.
Interest rate
The programme is offering loans of ₹500,000 to ₹50 lakh at an interest rate of 17-20 per cent per annum. The product has been rolled out across 200 cities in India as of now. Businesses applying for loans under this programme won’t be charged a processing fee.
Small businesses, who often do not get loans as the requirement is either too low for making it viable to the lenders or they don’t have a history of financial reports to support their application, being new to the market, will benefit from the programme.
Facebook is also looking to support women entrepreneurship in the country through this progamme. Businesses partially or fully-owned by women will get a special 0.2 per cent reduction per annum on the applied loan interest rate from Indifi.
According to Mohan, there are around 200 million businesses which use Facebook, WhatsApp and Instagram every month, and a significant number of this is from India. “As part of our $100 million global grant for small businesses, we deployed about $4 million in India for more than 3,000 small businesses across five cities we operate in,” he said.
The Small Business Grants programme was launched last year during the pandemic, across 30 countries.
While Facebook will only enable the loans, Mohan believes that promoting small businesses ecosystem to grow in India will only help the social media giant in the longer run as they might eventually start using the platform for business and advertising. The programme is a non-profit arrangement and businesses applying for the loans don’t have to advertise on Facebook.
Speaking at the launch event hosted in partnership with FICCI, Amitabh Kant, CEO, Niti Aayog said, “Digital transformation will act as a catalyst in the India story going forward. Access to financial inclusion is important, and the small business loans initiative by Facebook is a step in that direction. I am happy to note, India is the first country where Facebook is taking up such an initiative.”
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