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EIN Business Loans

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Business Loans with EIN Number

If you’ve ever applied for a personal credit card, mortgage, or loan, you know that lenders request your Social Security number (SSN), a unique 9-digit number that identifies you as an individual with the United States government. When getting your business off the ground, you might have used your SSN and other personal identifiers to apply for credit. While it helped you obtain funding at the time, in the long run you’ll want to build business credit that’s separate from your personal credit.

Building separate credit allows you to keep personal assets safe should your business become party to a lawsuit, or should you go out of business. Tracking finances separately also helps when preparing financial statements for potential investors, or during tax season. 

For small business owners, there are other ways to identify your business when applying for capital. An Employer Identification Number, or EIN, is one numeric identifier commonly used by small businesses. While you can apply for some business credit using an EIN, in most cases—but not all—you have to provide a personal SSN, too. 

If you’ve applied for a business loan and the lender has requested an EIN number, here’s what you need to know about business loans with an EIN number.

What is an EIN?

Per the Internal Revenue Service (“IRS”), “An EIN is a 9-digit number (for example, 12-3456789) assigned to employers, sole proprietors, corporations, partnerships, estates, trusts, certain individuals, and other entities for tax filing and reporting purposes.” The number identifies your business with the IRS and other financial institutions.

If you have employees, the IRS and state and local taxing authorities require that your small business have an EIN. If you run a sole proprietorship, for example—an EIN isn’t necessary to pay taxes.

When Does Your Business Need an EIN?

Not sure if you need an EIN for tax purposes? Take a look at the agency’s checklist.

If you can answer yes to any of these questions, you need an EIN.

  • Do you have employees that you pay on a W-2?
  • Have you structured your small business as a corporation or partnership?
  • Does your small business file tax returns for Employment, Excise, or Alcohol, Tobacco, and Firearms?
  • Do you withhold taxes on non-wage income paid to a nonresident alien?
  • Does your business have a type of retirement plan called a Keogh plan?
  • Is the business related to organizations including trusts, IRAs, Exempt Organization Business Income Tax Returns, estates, real estate mortgage investment conduits, nonprofit organizations, farmers’ cooperatives, or plan administrators?

Even if you don’t technically need one, consider applying for an EIN to build business credit or if you plan on hiring employees in the future.

How to Get an EIN for Business Credit

Applying for an EIN is a relatively quick and straightforward process. The IRS has a free online application EIN assistant that walks you through the steps. To apply by fax or mail, fill out IRS Form SS-4. Both forms request your name, business industry, business structure, and number of employees. With the online application, you could receive an EIN number in a day.

Can I Use My EIN Instead of My SSN When Applying for Credit?

Once you have an EIN, you can use it when applying for everything from business credit cards to short-term loans. While some lenders allow you to apply with just an EIN, if the lender requires a personal guarantee it will also request a SSN.

How to Get a Business Loan with an EIN

If you’re able to apply for a business loan with only an EIN, the lender will treat your business as a separate entity. If they do, the loan won’t impact your personal credit score. 

In the following cases, a lender might not check your personal credit:

  1. If your small business is established, in business for several years, with a clean business credit history and strong financials.
  2. If the business can pledge collateral, or take full responsibility.
  3. If you’re applying with an alternative lender that doesn’t require a personal guarantee.

Examples of EIN-only loans include:

  • Merchant cash advances (“MCAs”)
  • Invoice factoring
  • Accounts receivable financing

What all these loans have in common is that the lender bases the loan amount on sales as expressed by credit card receipts or past due invoices and accounts receivable. 

Best Business Loans with EIN

If you’ve already obtained an EIN and need to access capital, here are the best business loan options.

Fast Business Loans

If it’s time to invest in an acquisition immediately, expand your number of retail outlets, or put money into research and development, look into a fast business loan. Designed for immediate projects, lenders offer loans between $50,000 to $2 million. They can also have a longer repayment period of up to three years. 

In addition to your EIN, you must have a personal credit score above 530, minimum monthly revenues of $10,000, and at least two months of operations. Within as few as 24 hours after submitting your application, you could have the funds needed to grow your business.

Merchant Cash Advance

If you do a large volume of credit card sales, look into applying for a merchant cash advance. When working with a merchant cash advance lender, you sell them a percentage of your credit card receivables. They’re advancing funds based on past credit card sales, and your future sales serve as collateral for the loan. You’ll need to provide your past few months’ bank statements and credit card receipts when you apply. 

MCAs are easy loans to repay since the lender takes their repayment as an automatic deduction of future sales. It’s deducted from your credit card swipes in dollars and cents, not a large, monthly loan payment. If your small business has minimum monthly revenues of $8,000 which are mainly processed through credit cards, you can apply for a merchant cash advance with a credit score as low as 500 and an EIN.  

Invoice Factoring or Accounts Receivable Financing

Similar to a MCA, with invoice factoring or accounts receivable financing lenders fund the loan based on your sales. However, they’re funding the loan based on past sales. 

With invoice factoring, the lender looks at your past due invoices. They determine the creditworthiness of your customers and then offer to buy your invoices for a lump sum. This lump sum will be a discount from the invoice’s total amounts.

With accounts receivable financing you still own past due invoices, the lender just advances you capital based on their total amount. You remain responsible for collecting on the invoices, and still have the opportunity to recoup their full amount.

Because both of these financing options rely more on your customer’s credit profiles, it’s possible to receive an advance with just an EIN.

Working Capital Loans

Working capital loans help pay for day-to-day operations like payroll, rent and utilities. They’re not meant to fund large expansions, though lenders don’t place any restrictions on how you spend the funds.

Underwriters look at bank deposits and monthly revenues when approving a working capital loan, making it a faster loan application process than a bank loan. If you’re experiencing a temporary cash flow crunch, these loans help out in a pinch.

Business owners with credit scores above 650, and EIN, and two months in business can qualify for a working capital loan. 

If you’re a small business owner in need of capital, having an EIN will make it easier to qualify for financing. Since it’s simple, and free, to get one, there really aren’t any downsides to applying for an EIN. Building business credit will also help you qualify for better rates and terms when you need capital in the future. An EIN is a win-win.