Facebook Ventures Into SMB Finance

As Facebook continues to step into the world of payments, the company is officially moving deeper into financial services through a new partnership with Clearbanc.

According to news from The Financial Times on Thursday (Oct. 26) said Facebook is working with the Canada-based FinTech company to provide cash advances to businesses. The partners have reportedly been working together since February, developing an initiative they dubbed “Chrged,” which enables Facebook business users to connect their Facebook Ads account to Clearbanc, which will then provide an offer, the publication explained.

Clearbanc then receives a part of revenues earned by the company until the cash advance is repaid, as well as a fee of between 5 and 1o percent, reports said, which added that the fee is set based on the business’ financial health.

Co-Founder and Chief Executive of Clearbanc Andrew D’Souza told the Financial Times that so far, 1,000 small businesses (SMBs) have trialed the service. Clearbanc and Facebook will now begin to more aggressively push out the service, he added.

Reports said Clearbanc’s debt capital is sourced from an array of insurance companies, like London Life and Power Corp, as well as family offices and structured credit funds. According to D’Souza, Facebook does not profit from the service but benefits from working more closely with its small business customers.

“At Facebook, we are in the business of helping small companies become large and local companies become global,” said Facebook Director, SMB, North America, Katherine Shappley in an interview with the publication. “The Chrged program by Clearbanc provides an exciting opportunity for businesses to access the resources they need to grow.”

Facebook’s entrance into the small business financing space comes at a time when more industry experts are beginning to look toward technology conglomerates like Amazon and Google to disrupt the SMB lending and finance space.