When you apply for a business loan, you typically need to supply your Social Security number plus your employer identification number (EIN). This is so lenders can check your personal and business credit.
However, if you have an established business and a good business credit score or meet other criteria, you can apply for certain types of business loans with EIN only. However, EIN business loans can be harder to find and may have higher interest rates than loans with a personal guarantee.
What is an EIN?
An employer identification number (EIN), also known as a business tax ID number, is a nine-digit number assigned by the IRS, kind of like a Social Security number. It’s designated for businesses, organizations and others required to file taxes for business purposes.
EINs are used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of descendants, government agencies, certain individuals and other business entities.
Types of loans you might be able to get with an EIN only
Most traditional lenders and more traditional loan types require a Social Security number in addition to an EIN so they can review both your business and personal credit profiles. However, there are a few sources of business financing where you may have a better chance of finding business loans using EIN only. However, even with these types of lenders, you’ll likely still need to prove your business revenue and other factors to qualify.
Online business loans
Online business loan lenders typically have less stringent requirements than more traditional business lenders. Online lenders may be more willing to extend a loan based on an EIN and other criteria rather than your personal credit history.
Online business loans typically also have a quick turnaround time, making them ideal for borrowers who can’t afford to wait long for loan approval. However, this convenience often comes with higher interest rates, and you may also be charged origination fees or prepayment penalties. Online business loans may be secured or unsecured.
If you have business credit and high sales volume from credit and debit cards, you may be able to get an MCA loan using only your EIN. MCA providers extend a lump sum loan in exchange for a percentage of your future credit card sales.
You’ll typically repay the loan weekly or daily, plus interest or fees, depending on the lender. You may also have to agree to have the payments automatically deducted from your account. MCAs are generally considered a short-term financing solution because they can be very expensive due to high rates.
Invoice financing or factoring
Invoice financing and invoice factoring are similar to MCAs in that loan amounts are repaid from your sales, but there are some distinctions. Invoice factoring involves selling your unpaid invoices to a factoring company in exchange for a short-term loan.
With invoice financing, by contrast, you don’t sell your invoices. Instead, you borrow against the value of the unpaid invoices and repay the lender when your business collects the money. These loans offer fast access to cash but can be expensive short-term solutions.
Equipment loans
Equipment loans are used to purchase tangible assets for a business, which are used as collateral for the loan. It’s very similar to an auto loan, where you make monthly payments for a set loan term. If you fail to make your payments, the lender can repossess the asset. You can find equipment loans through manufacturers, dealers or lenders that specialize in equipment financing.
Because the equipment loan is backed by collateral (your business asset) and often requires a down payment of 10% to 20%, these types of loans are less risky for lenders. For that reason, you may be able to get an equipment loan by using just an EIN and meeting other lender requirements.
No doc business loans
No doc loans are online business loans that typically connect to your financial accounts instead of requiring you to send in a large amount of paperwork, like tax returns. This means a simpler application, and the possibility of less documentation to be approved for the loan. Like other online loans, no doc loans may be more inclined to offer business loans using your EIN.
No doc loans come in all shapes and sizes and are often funded within 24 hours. However, you’ll pay a higher APR and typically have shorter terms compared to a traditional business loan.
How to apply for a business loan with an EIN
In general, most lenders look at both your business and your personal credit before approving the loan. However, if you own a business with an established credit history and strong financials, you may be able to get some types of business loans with an EIN only. Here’s what you need to do.
Decide what type of loan you need. Do you need working capital, new equipment or a real estate loan? Nailing down your loan purpose can help you narrow your search to lenders who handle those loan types.
Understand your credit. If you’re relying on your business credit only — which is tied to your EIN — it’s important to know your score. Experian, Equifax and Dun & Bradstreet are three major business credit bureaus where you can find your business credit score.
Compare lenders. Interest rates and fees tend to be higher when seeking financing with an EIN only, so look around to find the best deal.
Prepare your documents. You’ll likely need to provide financial statements and records to apply for an EIN business loan. Check lender requirements so you’ll have the necessary documentation on hand once you’re ready to apply.
Apply for the loan. Once you’ve picked a lender that meets your business needs, fill out the loan application and submit any required documents. You can usually complete the process online and receive approval within a day or two.
PRO TIP
If your business credit is thin or nonexistent, consider getting a business credit card to build or boost your credit score. Business credit card issuers typically review your personal credit history before approving the card, but credit cards can be easier to get than other types of financing and will help to improve your business credit.
Pros and cons of EIN business loans
It’s important to know the risks and rewards when applying for business loans that only require an EIN.
Pros
Personal credit is not a factor. Because an EIN-only business loan doesn’t require a personal credit check, you may qualify for the loan even if your personal credit score isn’t very good or you carry a lot of debt.
Faster funding. Lenders who offer loans with EIN only may rely on other criteria, such as high sales volume, which can often mean quicker turnaround times.
Builds business credit. If you qualify for an EIN-only loan, you can build up your business credit, making it easier to qualify for future financing needs.
Personal assets not at risk. If you default on an EIN business loan, the lender can only go after your business assets, not your personal property.
Cons
Can be difficult to find. Most lenders that offer business loans typically want to see business and personal scores so EIN business loans tend to be more scarce.
More expensive. EIN business loans are riskier for the lender, which often results in higher interest rates and fees.
May be limited to more established businesses. Because EIN lenders don’t require a personal credit check, they may assign more weight to your business credit score. Newer businesses or startups might not have any business credit yet, making it harder to qualify.
Less flexible. Business loans that accept EIN only may have less flexible terms, like stricter repayment schedules and shorter loan terms.
Alternatives to business loans with EIN only
If you can’t find an EIN loan to meet your business needs or don’t like the loan terms, consider some alternatives. Keep in mind these options typically require a personal credit check to qualify.
Business credit cards. A business credit card can help you cover cash flow issues or other needs and build your business credit.
Business term loans. One of the more traditional types of business loans, term loans can be found at banks, credit unions and online. They offer lump sum payments and are paid back in equal monthly installments, making them easier to budget than other loan types.
Business lines of credit. Similar to credit cards, business lines of credit offer revolving credit up to a borrowing limit. This type of financing may have less flexible terms than a credit card but gives you access to cash rather than credit.
Microloans. Borrowers who qualify may be able to get microloans from nonprofit or online lenders that have less strict credit score requirements.
Personal loans. If you don’t qualify for a business loan, consider applying for a personal loan to help grow your company or meet other business needs.
Leverage your home’s equity. Homeowners sitting on a substantial amount of equity may want to borrow against that equity with a home equity loan or home equity line of credit (HELOC).
Bottom line
EIN business loans may be more difficult to find than traditional loans but can be advantageous for borrowers who don’t want to risk their personal credit and assets. Lenders that might offer EIN loans include merchant cash advance providers, invoice factoring or financing companies and some online business loan lenders.
The issue with business EIN loans is that they’re typically more expensive than other financing solutions and may have rigorous repayment schedules. In addition, they may be out of reach for startups or less established companies with little to no business credit. Start by defining your financial goals for your business loan, then explore all your options and compare multiple lenders.
Frequently asked questions
How do I apply for an EIN?
You can apply for an EIN on the IRS website, or you can do it by phone or fax. The preferred method is to apply online, and it only takes a few minutes. Your information is verified during the online session, and you’ll be issued an EIN immediately. You can then view, print or save your EIN assignment for future reference.
When does your business need an EIN?
Not every business needs an EIN. For example, sole proprietorships that don’t have employees, file excise taxes or have a pension, profit-sharing or retirement plan don’t need an EIN. Refer to this list to see if your organization needs an EIN.
You have employees
You operate as a corporation or partnership
You file any of these tax returns: employment, excise or alcohol, tobacco and firearms
You withhold taxes, other than income, paid to a non-resident alien
You have a Keogh plan (a tax-deferred pension plan for self-employed individuals)
Trusts (except certain grantor-owned revocable trusts, IRAs or if you file Form 990-T, Exempt Organization Business Income Tax Returns)
Estates
Real estate mortgage investment conduits
Non-profit organizations
Farmers’ cooperatives
Plan administrators
Is it possible to get an EIN business loan with no revenue?
It’s unlikely that you’ll be able to get an EIN business loan without proving some sort of revenue. While EIN business loans may skip your personal credit, lenders often rely on other factors like your business credit and business financials to determine eligibility.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
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