Most small businesses are looking for reviews from customers. Since Tripadvisor, AngiesList and Yelp have made consumers very aware they can read other customer testimonials before buying from the business, the quest for reviews has become more important in the minds of small business owners seeking small business loans with a bad credit history.
In a recent article title http://www.bankingexchange.com/blogs-3/unconventional-wisdom/item/5831-could-great-yelp-ratings-make-a-better-loan ‘Could great Yelp ratings make a better loan?’, it was stated that most banks analyze only traditional commercial credit history or company financial statements when making a lending decision whereas non bank lenders often consider a wealth of other data points including daily sales, accounting information, website traffic, business valuation, and social media data, among others.
The article states “if its [small business] presence on social media was considered, the business could be viewed as booming. On any given day, that restaurant may be receiving multiple positive reviews, hundreds of check-ins, and hundreds of social messages mentioning the food or the venue in a positive way.”
United Capital Source do believe with the article that “by leveraging these additional data sources, as well as traditional credit information, lenders can gain insight to create a more complete picture of a small firm’s creditworthiness. Not only will lenders feel more confident during the lending decision process, but they also may expand their portfolios by being able to review small-business loan applications they otherwise may have passed on.”
It is inevitable that more lenders will adopt non-traditional data sources and likely that more small businesses will qualify for the financial capital they need to grow. And when small businesses grow, it’s a positive sign for the community, the economy and society as a whole.
It will be interesting to see how Yelp plans to work with the financial lending community in the future. We’ll keep an eye out for the trends and keep you updated on this blog post.