Facebook has unveiled a trade finance program to support small businesses owned by women and minorities.
Under the Facebook Invoice Fast Track program, the social media giant will buy invoices from participants, sparing them from having to wait the usual 60 to 120 days to get paid by customers.
Facebook has committed $100 million to the plan and companies that are “certified as majority-owned, operated, and controlled by racial or ethnic minorities, women, U.S. military veterans, LGBTQ+ people, or individuals with disabilities” can submit outstanding invoices of a minimum of $1,000.
Customers of participants pay Facebook the outstanding invoices at the same terms they had agreed to with the small business.
Facebook piloted a smaller version of the program in 2020 after hearing how much the company’s suppliers were struggling in the wake of the COVID-19 pandemic, said Rich Rao, Facebook’s vice president of small business.
“We just heard first-hand the financial hardships that these suppliers were facing, and it was created really quickly and brought up as an idea and pitched to our CFO to say, ‘Hey, would we be able to help our suppliers with this?’” he told CNBC. “It was a very small pilot, but we did see that be very successful.”
As CNBC reports, “The program is the latest effort by Facebook to build its relationships and long-term loyalty among small businesses, many of whom rely on the social network to place ads targeted to niche demographics who may be interested in their services.”
The company cited a recent survey it conducted that found most small businesses are still struggling financially, with 60% stating they had some form of difficulty in paying business-related expenses and roughly a quarter reporting they are struggling to pay down loans or debt, bills, rent, and employee wages.
“The pandemic has been devastating for small businesses everywhere,” Chief Operating Officer Sheryl Sandberg said in a news release. “Many have closed for good, and many of those who remained open have seen sales slump and staff laid off. And it has hit businesses led by women and underrepresented communities the hardest.”