We’ve all heard the statistics on social media use at some point. The world is literally obsessed with social networking, with the average adult accessing their accounts several times daily. Facebook tops the charts with 1.79 billion users as of the third quarter of 2016, based on Statista data. More visual social networks, like Snapchat and Instagram, are gaining ground as the most interactive places where people of all ages share images on all aspects of their lives.
Even small businesses have gotten on board, with LinkedIn, Twitter, and Facebook as the top-ranked social networks where customers and their favorite brands connect. But, while social networking can be a useful and more personal way to stay in touch and share promotions, could it hurt your chances of getting small business loans? Let’s ponder this.
SOCIAL NETWORKING AS CREDIBILITY?
Whether you’ve just started a business or have been in business for a long time, a strong social media presence can influence a lender’s decision to loan you money or not. Today’s financial organizations do their research online and part of this process is verifying if your company has active social media accounts, or not. If your company doesn’t have at least one active social network, it can indicate that the company is not actively marketing to consumers – a black mark for your small business.
TOO PERSONAL AND TOO RISKY.
Another way that a small business could be hurting it’s chances of obtaining small business loans by engaging in social media has to do with the actual content shared. If the social feeds are regularly filled with negative content, complaints, and overly personal details about the company owners this can be a sign of trouble in the business. Also, be mindful of the associations that the business has on social networks, such as political or social causes because this could also turn a lender off.
NEGATIVE OR BAD CREDIT IN THE PAST.
Like many small business owners, things have been tough during the most recent recession. Credit scores slipped and many are in the process of rebuilding former thriving businesses and improving credit scores. Social networks can leave a negative blemish on small business owners because they reflect these bad times. According to an article in Business News Daily, lenders are looking at past histories of potential lenders, so it’s best to clean up any references to negative credit experiences from the social media archives.
ALGORITHMS FOR CREDIT INCLUDE SOCIAL RATINGS.
In recent times, a growing number of nontraditional small business lenders have turned to social media ranks as indicators of creditworthiness. Actual algorithms determine the value of companies. They look for certain signs that a company is progressing, through increased numbers of followers and sharing of social content. Make sure your small business has an established and strong presence on social networks before applying for a small business loan.
VENDOR RELATIONSHIPS TIED TO SOCIAL NETWORKING.
Along with a ranking system that translates social media activity to company credit worthiness, the associated vendors that your company does business with matters. If you are affiliated with certain website and merchant account vendors, you could be determining if you are in a certain credit bracket since some vendors only work with those with bad credit. Be careful to have a mix of vendor relationships representing all levels of credit scores and financial needs.
EXPERT STATUS CAN INFLUENCE LENDERS.
If you are considered to be a leading mind in your specific area of industry, then you can increase your chances of attracting an equally reputable small business loan company. Consider publishing a book in the near future to elevate your status, and share this on your social networks. Become a public speaker or start a blog or podcast. You want to be viewed as an influencer and someone with excellent professional value.
OFFENSIVE OR SCANDALOUS CONTENT.
Social media is one of those platforms where people think they can say and do anything they want. But, if you want any chance of getting small business loans, you’ll temper your social media content with some common sense. Leave out the controversial, offensive, and scandal-worthy content and imagery. Don’t share photos that give the perception you live the party life or have poor morals. Banks and lending firms are still old fashioned when it comes to things like this, so don’t blow it over a tweet.
STABILITY MATTERS IN BUSINESS.
If you have a LinkedIn profile, be mindful of how your past history portrays your stability as a professional and business owner. Do you have a string of new companies started over a short period of time? Do you have frequent changes in industry or interests appearing here? Take the time to look at your profile from the eyes of a financial institution. Avoid any awkward questions by improving your profile to appear more stable and concentrated on a specific goal, eliminating other unwanted information.
Social media isn’t going away anytime soon. In fact, it’s only going to increase in scope and use by small businesses. We are moving into increasing areas of mobility and social media is a large part of the ways companies and consumers stay connected. These networks can work in your favor if you understand how others view them, including lenders.
Financial companies have very sophisticated analysts and software that can be hard to influence, but you can reduce the chance of being turned down for small business loans by being responsible with your accounts. Go through your social media profiles now and clean up anything that paints your company in a negative light. Then you can be confident that your social media accounts will be working for you instead of against you as you seek funding.