Story at a glance
- Facebook committed $100 million to help small businesses by buying outstanding invoices for goods and services.
- This aims at loosening up cash flow for struggling businesses, especially for women and minority-owned companies.
- The Fed reported an additional closure of nearly 200,000 businesses thanks to the pandemic.
In a bid to help struggling small businesses continue recovering from the COVID-19 induced recession, Facebook is paying for some of the outstanding invoices from customers.
Announced on Monday, the social media titan announced an expansion of one of its preexisting programs to cover $100 million in invoices for goods and services.
Beginning on Oct. 1, eligible U.S. businesses can apply to get cash immediately for outstanding customer invoices rather than wait the 60 to 120 day standard period to get paid. This is designed to help small businesses with cash flow problems.
The rationale behind this funding decision comes alongside the release of Facebook’s State of Small Business reports.
“The pandemic has been devastating for small businesses everywhere,” Facebook COO Sheryl Sandberg wrote in a blog post. “Many have closed for good, and many of those who remained open have seen sales slump and staff laid off.”
She added that most of the small businesses struggling during this time are run and owned by women or racial minorities.
Upon the onset of the pandemic, federal aid was quickly approved and distributed among suffering businesses. This includes the Paycheck Protection Program (PPP), low-interest EIDL and the Restaurant Revitalization Fund.
Thanks to the public health shutdowns, roughly 200,000 U.S. establishments permanently closed in 2020, a study from the U.S. Federal Reserve reported, representing a 25 to 33 percent increase above average closure rates.