Facebook boss Mark Zuckerberg
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Facebook this week announced a $ 100 million pledge for a program to help small businesses owned by women and minorities by buying up their outstanding bills.
By buying up outstanding invoices, the Facebook Invoice Fast Track program puts money in the hands of small businesses that otherwise would have waited weeks, if not months, for their customers to pay.
The program is Facebook’s latest attempt at building its relationships and long-term loyalty among small businesses, many of whom rely on the social network to serve ads that target niche demographics that may be interested in their services.
Organizations can submit outstanding invoices for a minimum of $ 1,000. If they are accepted, Facebook will buy the bill from the small business and pay it within a few days. The customers then pay Facebook the outstanding bills on the same terms that they agreed with the small business. For Facebook, which had nearly $ 86 billion in revenue in 2020, waiting for payments is much less bad than it is for small businesses.
Facebook piloted a smaller version of the program in 2020 after hearing how hard the company’s suppliers were struggling in the wake of the Covid-19 pandemic, said Rich Rao, Facebook’s vice president for small businesses.
“We just heard firsthand the financial hardship these suppliers were facing and it was very quickly created and an idea came up and brought to our CFO to say, ‘Hey, could we help our suppliers with this? ‘”said Rao.” It was a very small pilot, but we saw that it was very successful. “
Now Facebook is expanding the program dramatically and buying up to $ 100 million in outstanding bills. Rao estimates that this will support around 30,000 small businesses.
“It’s a new concept, but we’re really excited about it,” said Rao.
US companies owned by women and minorities who are members of supplier organizations that serve underrepresented groups are eligible for the program. These include the National Minority Supplier Development Council, the Women’s Business Enterprise National Council, the National LGBT Chamber of Commerce, the National Veterans Business Development Council, Disability: IN, and the US Pan Asian American Chamber of Commerce. Facebook is also looking into adding more partner organizations for the program, the company told CNBC.
Lisa Dunnigan, co-founder of The Wright Stuff Chics, relied on the Facebook Invoice Fast Track program to keep her business afloat.
Courtesy of Facebook
Among entrepreneurs who have already piloted the program is Lisa Dunnigan, co-founder of The Wright Stuff Chics, which sells teacher merchandise and hosts the Teach Your Heart Out teachers conference.
After the pandemic forced Dunnigan to cancel all of their company’s in-person events in 2020, Dunnigan’s company announced a virtual version of their Teach Your Heart Out conference, scheduled for July. Teachers signed up for the conference in early 2021, but many paid with orders that took “a long time to pay out,” Dunnigan said. After Dunnigan collected the applications, she sent them to Facebook, and the company paid her over $ 10,000 in just a few days.
“This program has been a lifesaver for our company,” said Dunnigan, who was introduced to CNBC by Facebook.
Since then, Dunnigan has said she reapplied for the program and made Facebook pay her outstanding bills multiple times.
Dunnigan’s story is among the many Facebook saw after launching its pilot that indicated to the company it was worth growing, Rao said.
“We were just blown away by the stories that came back,” he said.
Interested companies will be able to apply starting October 1, after the program has officially expanded, Facebook said.