Facebook said this week it is increasing its support for small and medium-sized enterprises (SMEs) owned by women and minorities with an expanded program that offers to redeem unpaid bills and give entrepreneurs instant access to the funds they are entitled to. owed and to the money. flow they need.
The company has committed $ 100 million in the Expedited bill program that charges SMEs a small fee for cash advances and was designed to support the “common good” rather than enrich the social media platform, Director of Global Supplier Diversity Jason trimiew told PYMNTS in an interview.
âWe know the challenges that many of these companies from diverse groups face,â he explained. âAnd we know that when these businesses are successful, we can all do a lot better. So we step in to help.
Trimiew said that even before the COVID-19 pandemic, SMEs had long struggled with extended payment terms and the pandemic only made matters worse as customers suddenly felt the need to keep their money. longer, he explained. This means that SMEs cannot access the capital they need to keep their businesses running.
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Typical advantages of an SME
Trimiew cited the case of consulting startup Yardstick Management and Ebby Parsons as an example of what the bill clearance program can do.
âAs Ebby said, when the pandemic hit, counseling was one of those things that was considered ‘nice to have’ but not a ‘must have’, so when the pandemic hit her income came down. dried up, âTrimiew said.
Fast forward several lean months and the situation changed dramatically for Yardstick, as dozens of companies suddenly sought a consultation on diversity and inclusion programs in the wake of social unrest and the changes that followed the murder of George Floyd.
As a result, Yardstick suddenly found itself inundated with new customers, but due to the contraction it had experienced in the previous months, had no capital to support them all, until Facebook Fast Track program for invoices provided a solution, Trimiew said.
âYardstick was able to access the Facebook Invoice Fast Track program to advance some of the contracts he had signed, so he was able to invest in the people he needed to support this business and he ended up having an incredibly successful year. “, he said.
Facebook’s State of Global Small Business report released this month highlights the urgency for some small businesses, with access to capital being a top concern for entrepreneurs, Trimiew said.
“A lot of these businesses owned by minorities, women, LGBT people or people with disabilities are struggling to access capital,” he added. âWhen I was talking to our suppliers last year when the pandemic hit, many told me how they saw their revenues go down. They spoke to me about the importance of being able to access cash so that they can continue to invest in their business.
Facebook’s Invoice Fast Track program started as a pilot last year. The social media giant has partnered with two companies to make it happen, Trimiew said. They include the Detroit-based finance company called Supplier Success which provides the capital and a technology platform provider, Crowds.
âCrowds operates the platform where suppliers come to upload their invoices,â Trimiew said. âOnce they’re uploaded, we validate them, and then the vendors sell them, we buy them, and we give them money. Usually it takes a few days, then when the invoice comes due we will be reimbursed, then we will recycle those funds to buy more invoices and support more SMEs.
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Facebook charges a flat fee of 1% on all invoices, which Trimiew says is just enough to cover the costs of the operation. He promised that Facebook would not make any profit from the business, and that he had no plans to do so, he said.
âIt’s really not in our vision. We just think that if we can contribute in this way, we hope we can have an impact and keep some of these businesses going, âhe said.
Facebook also plans to contribute in other ways. In addition to Invoice Fast Track, Trimiew said the company plans to launch more product features in the near future that will allow businesses on Facebook to connect with lenders such as the CDFI community to find funding and grants for Their efforts.
“This will allow administrators of the Facebook business pages to access this fundraising resource center and see the different types of lenders there,” he said. “We are organizing this, working again with community partners, because we know the challenges that many of these companies from diverse groups face.”