Your social media accounts are more than just ways for you stay in touch with high school friends or share your weird, wacky, or outrageous adventures. These accounts influence the decisions that potential lenders are making about your characteristics – and therefor your abilities to responsibly repay small business loan amounts. While New Era Lending does not practice verifying your digital trail and reputation in lending decisions, according to Nav.com, some lenders readily take advantage of the trends to share – and share everything – online when they evaluate the potential risk factors associated with loan applicants.
Who Sees Your Profile – And Why Do They Care?
The majority of lending institutions who access online profiles of small business loan applicants are credit unions, banks that are technologically sophisticated, and lenders who offer smaller business loans. The trend to access social media profiles is on the rise, and does not appear to have an end-date in sight. From college admissions offices to job recruiters, social media profiles provide a behind-the-scenes look at an applicant.
Typical types of digital information sought and sources of it include:
- Facebook profiles and posts
- Twitter profiles and tweets
- Images associated with the applicant’s name
- Videos associated with the applicant’s name
- LinkedIn profiles
- Instagram accounts
- Yelp reviews
- Website traffic reports
- Accounting reports
- Online reviews written by the applicant
- Affiliation with online groups and organizations
- News reports associated with the applicant
All of this information comes together and forms what is known as the digital footprint of the applicant. Consider this digital footprint to be like the footprints on the moon. They remain – always. Even when a file is deleted from a single computer, it can still exist elsewhere in what we know as cyberspace.
Digital footprints leave impressions of who the small business loan applicant is on a daily basis. Pictures of partying on the weekend? The lender might think twice about sound judgement. Social media posts that are divisive? A lender could call into question the integrity of the applicant.
Digital footprints can also positively influence the lender. A young business that has high web traffic and glowing reviews is going to catch the eye of the lender, especially online lending services, as they generally track this type of information more readily. A small business that is selling out of its new product and everyone online is talking about how excited they are for the next shipment gains the kinds of digital footprints that will stick in a good way with lenders. In fact, some potential lenders would see online traffic and chatter like this as evidence of credibility and strength of the business. The lender might more readily trust that this borrower will be able to pay back the loan because there is already an enthusiastic customer or client base.
Companies such as LendUp use personal data, such as the traditional name, address, social security number, and banking information when gauging lending risk. However, it also uses social media and those digital footprints when it assesses the potential risks that applicants bring to the lending table. They consider Facebook, Twitter, LinkedIn and Yelp as some of the examples of how social media reflects the potential risks.
As previously mentioned, mobile-lenders are among those companies which rely upon digital footprints. Some mobiles lenders even believe that what customers say online about products and services is more indicative of lending risks than small business credit scores. The digital imprints about a small business – and the business owner – help to provide a more complete picture for lenders.
Beyond social media postings, company reviews online, and trending online activity about the small business in question, there are more tools that lenders use to assess credit risks. For example, some lending companies use cookies – those tracking numbers that assess browsing behaviors. These kinds of numbers have the potential to indicate to lenders how consumers (and even applicants) are behaving online.
While the most important factors for acquiring small business financing typically rests on the numbers game – how much money is needed, for what it will be used, and the likelihood that the business will be able to pay back the amount in the specified time – digital influences do exist. To minimize these digital influences, small business owners can take some of the following steps as they bolster their application integrity.
- Perform a small business search. Using multiple different browsing methods, the small business owner should perform an online search to see what people are saying about his/her business. These could be customer reviews (or complaints), marketing posts, and more.
- Perform a self-search. The small business owner is often the face of the company. He or she should make sure that his or her personal digital footprints are respectful and demonstrate responsibility and integrity.
- Pay attention to more than words. Business owners should make sure they know which pictures and videos are connected to their companies (and their personal profiles).
- Understand tagging. Even if the business owner does not create the post, he or she or the business could be “tagged” in the post, linking the business or event. Sometimes these tagging instances are to negatives. There are sometimes options where businesses or individuals can un-tag themselves.
- Monitor trending traffic online. Performing one single search to see what is out there about a particular business is not enough. Small business owners need to consistently monitor what others might be saying about their business online.
- Consider hiring a marketing agency to bolster the online presence of the business.
- Get digital footprint savvy. Small business owners can do easy things like send positive tweets daily, update online pictures on social media accounts, and even participate in things like community small business events.
- Encourage customers and clients to leave positive feedback and comments.
- When negative comments are made online, calmly and respectfully address the comments and see if the situation can be corrected.
All of these efforts will not only go to help grow the small business, but could perhaps be the difference between receiving an acceptance letter for a loan application or a rejection letter. While a small business’s online presence will fluctuate and is not always under the owner’s control, paying attention to the “small things” will help the owner be able to access and achieve the “big things”.
