Facebook is teaming up with Indifi, an online lender in India, as part of a larger initiative to bring on more local businesses as advertisers, Reuters and other news outlets reported on Friday (Aug. 20).
“We’re not looking to make money from this program, we don’t have any revenue share … but we are hoping this creates growth in the industry that will eventually benefit us,” said Facebook Vice President and Managing Director, India, Ajit Mohan, according to the report.
Mohan added that Facebook has not financed the strategy. The social media behemoth is, however, working with Indifi to offer loans starting at 500,000 rupees and maxing out at 5 million rupees ($6,719 to $67,191). The interest rate for small and medium-size business (SMB) loans would top off at 20 percent, Mohan said during a virtual press conference.
The loan program is available to SMBs in 200 municipalities in India, and is open to SMBs that have advertised on Facebook and its related apps for a minimum of six months.
Facebook considers India as a central market for expansion, with over 410 million users. India is WhatsApp’s largest region with an excess of 530 million users, according to Reuters. Instagram has more than 210 million users in the country.
Mohan indicated that numerous businesses from India are currently using Facebook, WhatsApp and Instagram worldwide. He pointed out that some 15 million businesses are currently using the WhatsApp Business platform, which was only recently launched, Mint reported.
Last year, Facebook introduced an SMB grant scheme intended to assist businesses negatively affected by COVID-19. Some $4 million of those grants were awarded to 3,000 firms in India, Mohan said. The new, separate lending program is considered a unique global approach.
Facebook will stay “at arm’s length” from the actual loans and lending process for the new program, Mohan said, per Mint. The social media giant also won’t have a hand in deciding who is eligible for a loan — that evaluation will fall on the shoulders of Indifi.
“While the rationale for the SMB grant was rooted in the financial crisis that occurred as a result of the pandemic, we are deeply aware that there are other structural challenges that have been around for a long time — particularly related to credit and funding,” Mohan said.