Facebook on Tuesday announced a US$100M commitment to offer cash grants and ad credits to help as many as 30,000 eligible small businesses in 30 countries where the company operates.
The program can help SMBs maintain their workforces, meet rent costs, connect with more customers, and cover operational costs.
In addition, Facebook’s Journalism Project is partnering with the Lenfest Institute for Journalism and the Local Media Association to offer $1 million in grants to local news organizations covering COVID-19 in the U.S. and Canada. That action will help to prop up local communities and keep relevant news and updates flowing.
Small businesses, the heartbeat of U.S. communities, are affected heavily by the health crisis, as more and more people sensibly stay home, noted Facebook COO Sheryl Sandberg. The longer the crisis persists, the greater becomes the risk to small businesses and the livelihoods of their owners and workers.
“We’ve listened to small businesses to understand how we can best help them. We’ve heard loud and clear that financial support could enable them to keep the lights on and pay people who can’t come to work,” she said.
Start but No Finish
In light of Facebook’s $71 billion in revenue last year, its announcement of financial help might be viewed as disingenuous.
“This could be very helpful for SMBs. Sadly, It is not enough to save anyone teetering in bankruptcy,” said Paul Bromen, CEO of Helpful Habitat.
A grant of $3,000 is not enough to make a difference. Facebook’s announcement is more about Facebook wanting positive public relations, he told the E-Commerce Times.
Facebook has made a valuable commitment to the SMB community during this time of need remarked Chad Sterbenz, chief investment officer at Kiva. However, these grants will represent only a first step in recovery for a small portion of the small business community.
“Almost all small businesses will need fast-acting and affordable sources of financing so they can pay their staff today and fund their operations until life returns to normal and the business is fully up and running again,” he told the E-Commerce Times.
Few Details Available
Eligibility for funding is not yet clear. Facebook promised to provide more details about who is eligible and how to apply in the coming days.
Facebook created a dedicated website for the new program, but as of Thursday morning, the page has no definitive information. It says the company will have details soon and will begin taking applications in the coming weeks.
SMB owners can sign up to receive more information when it becomes available.
Solutions Beyond Cash
Facebook is planning a range of other options to help businesses survive the COVID-19 outbreak and related challenges, according to Sandberg. These include a new Business Resource Hub to provide support for all businesses affected. The hub will connect them to relevant tools and advice.
Facebook is working on a new virtual training program to support businesses operating in altered conditions because of the COVID-19 lockdowns. The company is mapping a new strategy on how it can host dedicated virtual training sessions with businesses all over the world.
Another program under development is a new set of Facebook Blueprint materials focusing on remote work and managing remote teams.Ad Credits HelpfulOne of the best things Facebook could do for small businesses is to give free ad credits, according to Calloway Cook, president of Illuminate Labs.
“Profitability is way down for most non-essential goods during this economic downturn. People are understandably hesitant to spend their money, which makes the ROI on digital advertising drop significantly,” he told the E-Commerce Times.
Facebook can offer ad credits for free. That would make a huge difference for small businesses like his, which otherwise will have to stop advertising on Facebook until economic pressures lift, said Calloway.
It does not cost Facebook anything to run ads on its platform outside of the negligible computational resources. So it very easily could allow small businesses to run ads for free or at a significantly reduced cost. That would be much more cost-effective on its end than issuing cash grants, he explained.
“It is like if I had a personal website and you wanted to run a banner ad. It does not actually cost me anything to input that banner ad advertising your services. My profit margin is 100 percent,” noted Calloway.
Facebook could provide other options to assist SMBs, suggested Helpful Habitat’s Bromen, who suggested three main approaches.
First, Facebook could Improve struggling SMBs’ long-term business prospects by teaching them to use Facebook Ads. Many older business owners are afraid of using FB ads, he said.
“They are actually quite simple, but to figure them out you need to be able to experiment, which costs money,” Bromen noted. “Facebook giving ad credits will allow a whole generation of business owners who have missed out learn social media advertising.”
Second, small business owners can use cash grants to build their online presence now so they can come back strong once the coronavirus dies down. SMB owners who have this goal should focus on buying “likes” and connecting with influencers in their local communities now to get the word out when they are back in business, he recommended.
Third, SMB owners should use Facebook’s fiancial grant money to experiment with online models. One thing Bromen has been recommending to all restaurants is that they try to sell the bulk items in their freezer while everyone is in stock-up mode.
“The best way to do this is to use Facebook marketplace or Craigslist,” he said.
Other Ways to Help
Accessing and growing the community that backs your business is crucial to every SMB, noted Kiva’s Sterbenz. Aside from financial relief and customer support, small business owners would benefit from the emotional support of people who believe in them, instilling confidence during a time of immense uncertainty and stress.
Toward that end, Kiva offers access to 0 percent no-fee loans funded by its company’s users and partners. This opportunity will allow businesses to continue paying their staff and bills during the crunch, said Sterbenz.
Kiva loans are sourced from a community of supporters who believe in the value of small businesses, he said. The Kiva application is available now for U.S. small businesses to submit their applications today.