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:
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.
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.
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”.