In a public announcement this week, the social media giant Facebook has said that it has dedicated a $100 million commitment to a program that supports small businesses owned by minorities and women. The company used cash to buy up
their outstanding invoices.
By doing that, the Facebook Invoice Fast Track program provides small businesses with money. Therefore, these small businesses wouldn’t have to wait for months to get paid by their customers.
The move from Facebook is the company’s latest effort to establish long-term loyalty among small businesses which rely heavily on the social network giant to target customers and niche demographics.
How it works
According to the company’s statement, small businesses can submit an outstanding invoice of a minimum of $1,000. Once accepted, the social network would then buy the invoice from the small business and pays them within days. Consequently, the relationship becomes between Facebook and the client directly. Facebook has generated over $86 billion in revenue last year. Therefore, waiting for payments isn’t a big deal it.
“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?’” Rao said. “It was a very small pilot, but we did see that be very successful.”
Now the company is expanding the program and Rao estimates that over 30,000 small businesses will benefit from it.
“It’s a new concept, but we’re really excited about it,” Rao said.
U.S. businesses owned by minorities and women are eligible to apply for the program. This includes the National Minority Supplier Development Council, Women’s Business Enterprise National Council, National LGBT Chamber of Commerce, the National Veterans Business Development Council, Disability: IN and the U.S. Pan Asian American Chamber of Commerce. Facebook is also exploring adding more partner organizations for the program, the company told CNBC.