Facebook will offer loans to small businesses in India under a new initiative with online lending platform Indifi, the company said on Friday.
The California-based company has started its Small Business Loans Initiative in partnership with Indifi and will not receive any revenue through the partnership, it said.
The loans will be offered to firms that have advertised on Facebook's family of apps, which includes Instagram and WhatsApp, for at least 180 days and will range from 500,000 rupees ($6,720) to 5 million rupees. The interest rate will be 17 per cent to 20 per cent per annum without collateral, the company said on its website.
Indifi will also provide a 0.2 per cent reduction on interest for businesses that are partly or fully owned by women.
“We are at the spear end of the digital transformation and we believe that the Small Business Loans Initiative can provide big impetus to early entrepreneurs to fuel their ideas and their appetite for taking risks,” Ajit Mohan, Facebook managing director for India, told Bloomberg.
To be eligible for loans, the companies should have a presence in 82 Indian cities, it said.
Facebook is boosting its presence in India. Last year, it bought a 10 per cent stake in Jio Platforms, owned by India’s richest man Mukesh Ambani, for $5.7 billion.
There are more than 340 million Facebook users in India alone, making it the leading country in terms of the social media platform's global audience size of 2.89 billion active monthly users, according to Statista.
Facebook saw a sharp rise in the number of users of its platforms during the pandemic, with many people switching to social media and home entertainment options during the Covid-induced lockdowns.
Facebook reported an annual 101 per cent rise in second-quarter net profit, driven by strong advertising sales growth.
Net profit surged to $10.4bn in the three months to June 30, almost 9.4 per cent up on a quarterly basis, it said last month.
Revenue during the period rose 56 per cent to more than $29bn, surpassing the $27.9bn estimates made by analysts. This was the fastest revenue growth since 2016, exceeding the first quarter’s growth of 48 per cent.
To attract more users to its platform, the company in July announced it would pay out $1bn by the end of next year to creators for the content they produce on Facebook and Instagram. The money will be paid to creators for achieving “certain milestones” and for the advertisements running on their videos on these platforms.