Every small business can make a big impression by participating in social media. Not only is social networking a lot of fun, but it’s been shown to improve the marketing effectiveness of the companies that engage with customers in this medium. According to Smart Insights, 76% of Americans use social media on a daily basis, accessing their favorite brands and companies up to 15 hours each week. With nearly every company having at least one social media account, it’s a great opportunity for companies to develop loyal fans.From creating a strong brand to connecting with individuals on their level, nothing beats social media. But, did you know that social media can also help you obtain small business loans? Thanks to new technology that tracks social influence, more companies than ever before are able to get the working capital they need to grow their businesses. Here’s how it works:
SOCIAL MEDIA IS VIEWED AS AN EXTRA WAY TO RESEARCH COMPANIES
An article in the Orlando Sentinel advised that a growing number of financial firms and risk-assessment companies are turning to social networks to determine if small businesses are worthy of small business loans. These pros are essentially mining social networks for deeper data on social accounts to spot trends, evaluate strengths, and identify weaknesses. When a company applies for a small business loan, they should expect to be researched well before any money changes hands.
NEW CREDIT EVALUATIONS USING SOCIAL MEDIA REPUTATION
More financial firms are turning to smart analytics which rate companies on their overall brand reputation, as opposed to simply looking at business credit scores. While we won’t name them specifically, there are some well-known business underwriting companies that use social ratings to determine if they should do business with a company or not. A small business that has zero social media presence will raise a red flag using this logic, and may not qualify for a small business loan.
NEGATIVE CONTENT CAN ELIMINATE YOUR COMPANY
One thing that all users of social media need to be mindful of, personal and professional, is that anything posted to a social media account is subject to others’ judgement. Many small business owners forget about this and that social content is easy to retrieve, even years out. PC Magazine released its end of 2016 biggest social media fails by company list, which gives some embarrassing examples of social media gone wrong. Lending firms stumble across things like this and it gives the impression that the company doesn’t quite have it all together with.
WHO YOUR COMPANY CONNECTS WITH COUNTS TOO
Making sure that there are no negative or offensive posts is one thing; but who your company associates with on social media also plays a part in whether you will get a small business loan in the near future, or not. Associating with negative or controversial people and organizations can make the company look bad. Allowing irresponsible connections to post content on your company comments looks bad too. And, you don’t want to go around linking to all the financial firms out there, because this smells of desperation.
CASH FLOW WOES TO AVOID ON SOCIAL MEDIA
It’s common for small businesses to experience a few ups and downs in terms of cash flow once in a while. This is probably another good reason why you need support from small business loans. But, if you want to get turned down, go ahead and start sharing your cash flow issues on your social networks. Things like venting when a big client doesn’t pay a bill, or complaining when you have to pay your business taxes – just don’t look very favorable to lending firms. In fact, they may determine your small business is too risky.
COLLATERAL AND ABILITY TO PAY ON DISPLAY
Another similar factor that lenders will be looking at is how established your company is in terms of business collateral. Do you have a social media account that displays your company headquarters, including a nice office setting and equipment that’s being used? Do you talk about the new vehicle you added to your fleet for your sales team? How about highlighting your employee success stories? If you want to impress a potential lender, make sure they can see how successful our company is and where it is headed in terms of growth.
VERIFYING SMALL BUSINESS INFORMATION
On top of researching small businesses, many lending firms are using social networks to verify the existence and viability of a business. With millions of micro-businesses starting every year, online lenders don’t have the advantage of meeting people face-to-face and conducting business walk through before lending money. A quick check on the most popular social media sites should provide some indication that a small business is what it says it is. This can also be a way to weed out any scammers posing as companies by reviewing the social media account history and post consistency.
It’s projected that social media will continue to play a pivotal role in small business financial evaluations and loans. As more business moves from traditional brick-and-mortar locations to entirely e-commerce models, social media will be the primary way that many companies earn revenues and stay connected with their customers. Be sure to clean up and maintain a strong social media presence for your small business so that you have the best chance of obtaining the working capital you need. Your business depends on it.
Working with a small business loan provider that understands this more modern way of doing business can support these efforts. United Capital Source is here to partner with you and we encourage you to read through our previous articles on small business loans and related topics so you can be in the know. We have small business loan programs for every type of business and industry.