Social media company Facebook has announced the launch of a special lending program for small businesses in 200 cities across India. Facebook launched a project called ‘Small Business Loan Initiative’ on Friday. The company has partnered with finance company Indify to lend to small businesses. Under this partnership, Facebook will offer loans of up to Rs 5 lakh to Rs 50 lakh to small entrepreneurs (MSMEs). The company says the goal of the project is to easily meet the working capital needs of small entrepreneurs (MSMEs).
The loan will be available in just five days
Ajit Mohan, Vice President and Managing Director, Facebook India said small businesses need not pay any collateral for this loan. The loan will be dispatched in just five days and interest on it will be paid at a rate of 17 to 20 percent per annum. Women traders will be given special exemptions, she said. They also get a 0.2 per cent discount on the interest rate.
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Why is MSME important?
- About 12 crore people are employed in MSME sector in India
- MSMEs contribute 45% to India’s industrial output
- MSMEs account for 48 percent of the country’s exports
Contribution of MSMEs to GDP
- MSMEs contribute 29% to India’s GDP
- MSMEs contribute 55 percent to Germany’s GDP
- MSMEs contribute 60 percent to China’s GDP
The money will be made via Facebook
Facebook will give the money to small entrepreneurs, but the final decision will be made to whom and how to retrieve it. Significantly, in September last year, Facebook had raised $ 100 million, which is said to be used in 30 other countries, including India. However, the project is brand new and has been launched in India for the first time in the entire world.
Major contribution of MSMEs in the economy
Amitabh Kant, CEO of the Policy Commission, said MSMEs have a special role in the country’s economic development. In this case, now Facebook’s campaign is helping to keep the MSME sector going. He said the Government of India is working to provide all possible assistance to MSMEs. Indian MSMEs have a huge opportunity after the corona epidemic. He could use this opportunity to strengthen his hold on the global market.
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Helps to do business
FICCI President Uday Shankar said Facebook’s initiative would help the MSME sector to continue. Especially when those companies are unable to take out a loan by placing something. But if they get working capital, they can continue their business even during this crisis. Due to lack of credit guarantee, banks and other companies are not offering them business loans.