Social Media Accounts – Are they Good Collateral for a Loan?

Social media accounts with lots of followers or activity do have value for the social media company, the user, and advertisers.

Someone like Kim Kardashian can post a picture of a handbag on Instagram and instantly generate buzz (and sales) for that company; she can literally even charge an advertiser money for her to post something about them on Twitter.

Meanwhile the social media company can make money by selling and inserting their own ads into the mix.  Obviously she is the extreme, but even a user with 10,000 followers might have value for a company trying to compete in a particular niche, especially if the followers were targeted to a particular demographic or interest.

One company, ViralAccounts, offers to buy social media pages accounts with a lot of followers.  They say that generally their minimums are:

• Facebook fan pages – at least 100,000 fans
• Twitter – at least 50,000 REAL followers
• YouTube – at least 10,000 subscribers
• Instagram – at least 40,000 followers
• Google Plus – at least 50,000 +1’s
• Vine – at least 50,000 followers (no longer available as Vine was shut down by Twitter)
• Pinterest – at least 10,000 followers (you might also be able to sell a Pinterest account as a niche website)
• Tumblr – at  least 10,000 unique visitors a month
• other social media accounts are considered

It looks like they turn around and sell the social media accounts to people or businesses interested in a particular niche.

For instance, if my niche were investing in tax liens, a Twitter account with 50,000 real estate investors would be extremely valuable.  Presumably they have a lot of buyers and sellers coming to their website, so they effectively function as a marketplace.

If you are dabbling in the buying and selling of social media accounts, you won’t be able to benefit from operating the marketplace.  However, you don’t have to be able to monetize any of these by selling them to an end user yourself.

You could loan money to someone using their social media account as collateral.  The way it would work would be to first get an estimate from one or more companies that buy social media accounts.

Once you know that the collateral was good, you could loan money to someone with their social media account(s) as collateral.  You would need to have control over the account so that you could transfer it if necessary.  It is not the type of thing that you could easily “repo” without having the keys in advance.

Hopefully, you would just earn interest on the deal and be paid back on time.  In the event that the borrower defaulted, you would have the ability collect on the amount owed to you buy selling the social media account.  (This is not unlike the business model of a pawn shop)

There is nothing illegal about selling social media accounts.  However, it probably is a violation of the terms of use for a particular website.

So it is important to be mindful of that.  Also, the value placed on social media accounts is relatively small; even accounts with tens of thousands of fans may only sell for a few hundred or a few thousand dollars.  Because of this and other risk factors, it is probably not the type of thing you want to loan a lot of money against.  It would be ideally suited for a very small friends and family type of loan where some type of collateral is better than nothing.