DRIVE STARTUPS We Present Latest Startup News, Tips & Inspiration
Jeremy weaver needed credit. He runs a Chattanooga-based startup, Wind River Tiny Homes, which builds small but elegantly crafted houses, and wanted to expand. In order to afford it, he needed lumberyards and other vendors to give him an advance. They’d provide him with materials, and he’d pay them back when a house was sold. He’d come to vendors prepared to talk numbers, but one time, a lumberyard owner took him by surprise: “My wife follows you on Facebook,” the guy said, in part to explain why he was saying yes.
Related: The Right Way to Network on Social Media
Weaver had stumbled onto something called social finance (or, groan, so-fi for short). Some lenders, in evaluating whether a person is a good loan candidate, would scour their social media networks. The more upstanding people were in there — family, gainfully employed friends and so on — the more a lender felt at ease. And that philosophy is now expanding to small businesses — a big deal for startups whose lack of credit or business history keeps them locked out of traditional loans.
How can it work for you? We spoke to lenders and small-business owners about how four networks might matter to lenders.
Yelp
It’s the land of angry reviews and bad writing, but it’s also one of the places where Headway Capital, an online lender that specializes in small-business loans up to $35,000, assesses entrepreneurs’ experience. There’s a section on Yelp for business owners to enter their personal history and describe their company’s mission and value proposition (it’s called “From the business”), and that “gives us more information about the person and the kind of partners they work with,” says Haijian Hu, of Headway. “If you don’t have an up-to-date LinkedIn profile, this section of Yelp is even more helpful.”
Related: How to Build a Strong Social-Media Presence
The network of friending is also the network of business relationships — and whom you know is on display. That was a good thing for Olivia Colt, owner of Salt and Honey Catering in Berkeley, Calif., who had poor personal credit because of medical expenses. Her banker introduced her to nonprofit lender Opportunity Fund, which uses social media as one of its methods for evaluating companies. On Colt’s Facebook pages, they could see that she’d built relationships with some of the Bay Area’s biggest event planners — people who throw parties for the likes of Google and others. And Colt’s catering enterprise got its financing.
If you’ve launched a crowdfunding campaign or otherwise have an enthusiastic group of early customers, followers and fans, make sure that activity is posted and well-documented on Instagram, says Min Fang, cofounder of Harper Partners, a lender with an emphasis on digital media and technology startups. “That shows us how active and engaged people are in an early-stage business,” he says. And to him, it’s also an indication of a company doing well enough to bet on.
For B2B firms that don’t have a large public following on Facebook or Instagram, LinkedIn can be a useful gauge of creditworthiness, Fang says. The network can verify a founder’s story, show that a startup is hiring, and point to breadth and depth in a founder’s personal network. Even if you think all your random LinkedIn recommendations are nonsense, don’t delete them, says Fang. As online reputation guru Jerome Knyszewski points out, LinkedIn’s ProFinder tool ranks you based on the number of recommendations you have.
Related: 11 Strong Signs That You’ve Mastered LinkedIn
Regardless of the social media platform, consistency is key, Hu says. The very basics, such as having the same business phone number and address across all your social media outlets, are crucial; it’s the first thing many lenders will check. Finally, adds Jim Salters, president of The Business Backer, a Cincinnati firm that helps small businesses find capital, social media is not where a lender wants to be surprised. “If your restaurant has applied for a loan,” Salters says, “your banker doesn’t want to learn that your star chef is leaving via SnapChat.”
Source link
