As a business owner, you probably already know that social media can be a great tool for building your brand and engaging with customers.
However, your social media accounts could have more value than you realize. In addition to fielding feedback from customers and increasing website traffic, you can use your social profiles to help solve one of the biggest problems small businesses face: access to capital.
While most lenders use traditional metrics to approve small business loans — such as credit scores, assets and cash flow — some also take a close look at your business’s online presence before they’ll extend you financing.
Social media and business loans
In November of 2023, big banks only approved 13% of small business loan applications, according to the Biz2Credit Small Business Lending Index. If you want to improve your chances of qualifying for a loan and getting a low interest rate, it couldn’t hurt to give your social media accounts a tune-up.
Yes, figures like your revenue and expenses still matter. But your social media presence and online reviews can also help you qualify for financing, especially if you’re a new business or you haven’t established business credit yet.
According to Experian, which developed the Social Media Insight tool that lenders can use to assess your social media engagement, the data they pull from your social accounts can help lenders predict how risky your business is. “For businesses that have thin credit profiles, a strong social media reputation can be a good measure of health,” Experian’s website says.
What do lenders look for?
Looking at your online bios, posts and reviews gives a lender a wealth of information that isn’t necessarily available anywhere else. For example, negative reviews or a tarnished brand image can spell bad news for your future sales, and dormant accounts can indicate your business is no longer actively operating.
Here’s what a lender might look for when researching your online presence:
- Do you appear to be a legitimate business?
- Do you receive positive feedback and reviews from customers?
- Do you have a loyal customer base?
- How do you respond to negative comments and complaints?
- Are you a leader or an expert in your industry?
- Is it easy for customers to contact you?
- Does your profile information match your loan application?
Social media can also impact your credit file
Some of the major credit scoring companies add your social data to your credit file and use it in their score calculations. Dun & Bradstreet (D&B), the company most often used by lenders for business credit scores, looks at news articles and social media posts when generating credit information about your business.
D&B doesn’t specify exactly how your data impacts your scores, but according to its website, claiming and maintaining a “consistent business identity across the web at all times” is a key step in building your business credit file.
Alternatively, some lenders use the aforementioned Social Media Insight tool from Experian when determining what you qualify for. If a lender goes this route, your online presence will definitely play a role in loan approval. Here’s some of the data Experian looks for:
- User check-ins on your business accounts
- The volume of customer reviews you’re receiving
- Basic details like your hours of operation and service descriptions
For more insights into the relationship between your social media presence and your credit file, you might consider signing up for Nav’s Social Health Score, a five-point score that reflects how well you’re managing your business’s reviews on sites like Facebook and Google. Just note that this score is not used in lending decisions.
5 tips for improving your social media presence
You can’t necessarily improve your revenue or your business credit scores overnight, but you can start cleaning up your social media accounts in an instant. Here are a few ways to ensure your online presence will impresses both lenders and clients:
1. Choose your network(s) wisely
If you’re just getting started, be strategic about which social networks you invest time into. You don’t need to be active on every platform, and trying to do so can make it hard to use any one network effectively.
Instead, focus on the one or two that best showcase your business. With over three billion active monthly users, Facebook is still the most popular social network for consumers. But if you need to demonstrate how your products are used, you might be better off starting with YouTube. If you’re promoting a business-to-business (B2B) service, LinkedIn is likely the best choice.
2. Be consistent across platforms
Even if you don’t have much time to post, take a few minutes and ensure all of your public accounts have consistent information. Whether it’s your Instagram account or your Google Business Profile, each one should have up-to-date contact information, your current hours of business, the correct link to your website and, if applicable, your latest branding materials.
3. Stay active
If possible, make time to engage with your social accounts on a regular basis. By posting consistently, even if it’s just once a week, you show lenders and customers you’re actively in business. You’ll also get a chance to monitor comments and engage with customers in a timely manner.
4. Seek feedback
Encourage customers to give you feedback about your products and services. Their input can help you catch and address problems before you end up with a cascade of bad Yelp or YouTube reviews that turn lenders and potential clients away.
When clients are satisfied, give them incentives to post reviews and ask for permission to share testimonials. In addition to gaining more brand loyalty, you’ll let lenders know you’re selling a valuable product.
5. Engage thoughtfully
You’re bound to receive a negative comment once in a while. Instead of ignoring the feedback, respond in a proactive but calm and supportive manner. Where possible, offer a solution. Taking control of the situation can keep you from losing business and show lenders know how to retain your customers.
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