Facebook recently decided to buy outstanding invoices from businesses owned by women and minorities. The way it works is the business sells an outstanding invoice to Facebook, then Facebook has the debtor pay them what is owed. In return for this, the business pays Facebook 1% of the value of the invoice.
There is a catch– the invoices have to be “eligible.” Invoices must have a minimum value of $1,000 and the customers must have an investment-grade rating. In other words, the invoices ARE going to be paid, making this a no risk endeavor for FB.
Businesses eligible for this program must be certified by an approved partner organization as majority-owned, operated and controlled by racial or ethnic minorities, women, U.S. military veterans, LGBTQ+ people or individuals with disabilities. This makes FB look “woke,” but what is happening here is that they are taking advantage of gullible small business owners.
In other words, Facebook is making no risk loans at a rate that varies from 4% to 12% APR to gullible companies and making itself appear to be “woke.” I wonder how many people will think that FB is doing people a favor.