If you’re re-entering the job market, one of the first items on your checklist is probably cleaning up your social media profiles. But it’s not just job applications that make you a target for Google searches. When you apply for small business loans, lenders may be equally inclined to check out your social media profiles as a way of examining your credibility and responsibility.
They’re not looking for red solo cups or profanity, but subtle clues that can help them decide whether or not to approve your application, and if so, for how much. In this post, https://jatapp.com/ digital experts will explore how a strong social media presence could help you qualify for a small business loan, and what lenders look for.
The Small Business Loan Application
Small business lenders have a scrupulous review process to ensure that no risky businesses slip through the cracks. Traditional lenders, like banks, have a laundry list of requirements for small business loans, including:
- A personal credit score of at least 700
- 2 years’ time in business
- A comprehensive business plan
- Collateral
- Paperwork, including bank statements, tax returns, income statements, balance sheet, business debt schedule, and more
- Approval from co-owners
Online lenders have slightly different requirements, which prioritize future opportunities and potential over your business history or credit score. Instead of the bank requirements, online lenders will pay the closest attention to your annual revenue. Generally, there will be financing programs for all credit profiles.
The bottom line is that lenders want to ensure you’ll be able to repay the loan. So where exactly does social media fit into the equation?
Social Media Illustrates Your Business’ Commitment & Potential
The information that you give your business lender about your business and where things are moving only goes so far. After all, it’s the lender’s job to look at everything you’re providing under a microscope so they can make an educated decision about whether or not to approve you. Bank lenders may still utilize old-fashioned applications, but they’ve caught up to modern times when it comes to investigating a business’s social media profiles.
Your social media presence gives your business lender insights into how your business is actually performing. If you’re actively posting about sales, holidays, and new products on Facebook, then you’re clearly invested in acquiring new customers and on track for sustained growth. While activity on all social media platforms can aid in bolstering your professional image, your Facebook presence is paramount.
If You Aren’t Active on Social Media…
Well, what if you aren’t active on social media, or haven’t posted in months? It won’t hurt your chances of qualifying, but it won’t necessarily help them, either.
Lenders will do everything in their power to minimize risk when it comes to approving applications. Above all, that means scrupulously selecting the right businesses. When your business doesn’t have a strong social media presence, it indicates that you’re not particularly committed to your business’s future. If your brand isn’t leveraging the potential to connect with new customers, then are you really taking advantage of every opportunity? The answer is probably no.
The importance of social media for your business loan application can vary by industry, as well. For example, lenders are well aware that social media marketing is particularly impactful for the success of restaurants. Patrons are eager to follow local eateries, and may even browse social media profiles as part of their dinner selection process. Lenders know this and want to ensure the restaurants they’re funding are putting their best feet forward.
Activity (Especially Images) Paints a Bigger, More Detailed Picture
Social media activity does more than demonstrate your ambition to prospective lenders, though. It also helps you paint a bigger picture by telling a story about your brand, showing what you’re accomplishing on a day-to-day basis. Particularly, posting photos of your business in action can add a realistic dose of authenticity to everything you’re saying.
For a retail store, posting photos of customers shopping during a recent sale could help the lender envision what your location might look like on the average weeknight. It not only shows that you’re driving profits but also shows your storefront, taking imagination completely out of the equation.
This is true even in industries without spontaneous customers who can be swayed by fun photos, like commercial construction. Pictures of a recent office redesign or a crew working on installing new plumbing can demonstrate your ability to adhere to timelines, and that you’re taking on new business.
If your business model is new, unconventional, or simply difficult to explain, then posts and photos can help the underwriter to understand how you’re generating revenue. Depending on your needs, it could also help them to understand how you’re looking to utilize the funds.
Getting Positive Reviews & Responding to Customers is Important, Too
Your social media presence is about marketing. Lenders or underwriters may also investigate another (arguably more) important part of your business: how you build relationships with customers.
By simply visiting your Facebook profile, lenders can view how long it normally takes your business to respond to questions from customers. This metric shows how responsive and helpful your business is. When you promptly respond to customer inquiries, there’s a higher likelihood you’ll repay the loan on schedule.
Similarly, reviews on Facebook, Google, Trustpilot, and other social media/review platforms give lenders and underwriters direct insight into how customers view your business. Positive reviews shift the odds in your favor by demonstrating the high likelihood of returning customers.
Fintech Lenders Use Social Media in Underwriting Algorithms
It’s not all theoretical. While many banks sift through prospective borrowers’ social media profiles manually, some alternative lenders may have this functionality built directly into their underwriting algorithms.
During the application process, borrowers may have the option to allow lenders to access their business’ social media accounts. With access to these accounts, lenders can weigh this information—along with other factors—in determining whether or not to issue an approval. While there won’t be a human-looking into the algorithm, the principle remains the same: the more active, engaging, and helpful you are to customers, the more potential for success you have.
Need Funding? Start Upping the Ante
If you have a small business loan application in your future, then it’s best to play it safe by following best practices in your business. That mainly includes financial best practices—like making rent payments on time, depositing all monies in your bank account, and of course, keeping a positive balance in your account. While social media won’t be a deal-breaker for underwriters like other factors, it can have an algorithmic or reputational impact. To strengthen your chances of receiving approval, start improving your social media presence. You may see a significant ROI, too.