Facebook has attempted to leg into financial services at various times without a lot of success. Facebook Pay, WhatsApp Pay and Instagram Pay haven’t found their footing. The firm’s crypto Diem project has been plagued with problems, compelling the firm to develop a new digital wallet to build demand. The social media firm is now experimenting with small business lending with its new Invoice Fast Track program.
The announcement: In September, Facebook publicly introduced Invoice Fast Track, paying out small businesses immediately on their outstanding invoices. Facebook isn’t making this new service available to all businesses, though. Invoice Fast Track is available to U.S. for-profit companies that are certified as majority-owned, operated and controlled by racial or ethnic minorities, women, U.S. military veterans, LGBTQ+ people or people with disabilities. Companies must be certified by an approved partner organization. The service began October 1.
How it works: Businesses submit eligible unpaid invoices. Facebook requires invoices with a minimum value of $1,000 from customers with an investment-grade rating. In most cases, companies must sell all eligible invoices they have with those customers. Facebook customers pay 1% for the service to receive payment on their invoices and their customers, in turn, pay back Facebook what they owe.
Is Facebook factoring invoices?: It’s not entirely clear whether Facebook is actually factoring the invoices it buys off of SMBs, but from a previous announcement the company made, Facebook did test factoring.
Facebook piloted a smaller version of the program in 2020 to help the company’s suppliers that were struggling in the wake of the Covid-19 pandemic.
Fintech and factoring: Online SMB lenders Bluevine and Fundbox have roots in invoice factoring. But both have expanded beyond factoring, adding lines of credit and term loans as they’ve scaled their businesses.