Can You Get a Business Loan With Only An EIN? (2024)

In some cases, you may be able to get a business loan with only an EIN, or employer identification number. Whether or not your business can get a loan will depend on your business credit score, which is attached to your EIN.

If you are self-employed or a small business owner with a strong business credit score, there may be some cases where you can get a business loan with only an EIN. For most self-employed individuals and small business owners—especially startup founders—getting a business loan using only an EIN is rarely an option.

What Is an EIN?

An employer identification number, commonly known as an EIN, is a nine-digit number that the IRS assigns. EINs are used to identify businesses and other entities for tax purposes; they’re similar to Social Security numbers (SSNs) for individuals. An EIN is required for most businesses, including sole proprietors, partnerships, corporations and nonprofits. Employers who pay wages to employees must also have EINs.

Obtaining an EIN is a straightforward process that can be done online or by mail, and you’ll need one to comply with federal tax laws. An EIN is commonly used on tax forms, including payroll tax filings for employers and employees. EINs are also widely used on insurance and loan applications filed in the name of a business.

Pros and Cons of Loans With an EIN Number

Although it’s possible for some businesses to get a loan with only an EIN, there are pros and cons to getting financing this way. These loans aren’t widely available and they can come with higher interest rates than personally-guaranteed business loans.

Pros

• Protect your personal assets. If you get a business loan using only an EIN versus providing a personal guarantee, it won’t be tied to your personal credit. So, if your business defaults on the loan, the lender can only take possession of your collateral and can’t pursue you personally for repayment.
• Helps build business credit. When you get a loan using your EIN, your lender may report the loan and your payment history to business credit bureaus. This starts the process of building credit for your business.
• Doesn’t account for personal finances. If you get a loan using only an EIN, your lender may not use any of your personal finances in your loan application or require a personal guarantee. As a result, you may still qualify for a competitive interest rate even if you have considerable personal debt.

Cons

• Only available for established businesses. You need to have established business credit to qualify for a business loan with only an EIN. This usually requires being in business for several years and an established history of reliable debt repayment.
• Higher interest rates. Since loans extended based only on an EIN are rarely personally guaranteed, they’re riskier for lenders and have higher interest rates.
• Less flexible loan terms. The high risk associated with EIN loans can mean terms are shorter—only a few years—before they need to be refinanced or paid off.

How To Apply for a Business Loan With an EIN

You can apply for a business loan with your EIN if you’re a new business owner without established credit. However, you may also need to include your SSN and details about your personal finances because you’ll likely have to provide a personal guarantee.

If you have a well-established business with strong finances, you may qualify based on your EIN and business credit score.

Follow these general steps to apply for a business loan with an EIN:

1. Check your credit. If you want to apply for a business loan with an EIN, check your business credit score. Business credit scores typically range from 0 to 100, though FICO business scores go up to 300. If you have a low credit score—or no business score at all—first consider taking steps to improve it. This may include paying off existing business debts or opening and using a small business credit card.
2. Decide what type of loan you want. The best financing tool for your business depends on your borrowing needs and qualifications. Loans can differ based on interest rate or repayment terms, as well as personal guarantees and collateral requirements.
3. Gather documentation. If you plan to apply for a business loan with only an EIN, you’ll likely need to provide additional documentation as part of the verification and underwriting process. This often includes business financials to demonstrate the business can pay back the loan on its own.
4. Choose a lender and apply. Based on your borrowing needs and qualifications, shop around for lenders that can offer the necessary funds on terms that meet your timeline and budget. Once you have chosen a lender, complete and submit a loan application.

Business Loans That Don’t Always Require a Credit Check

Although it’s possible to get a loan with only an EIN, these loans are still based on the creditworthiness of your business. Alternatively, some options for getting business financing are not dependent on your business or personal credit.

Online Business Loans

Online business loans help businesses obtain funding quickly and easily. These loans are often designed to be more accessible than those from traditional lenders, with a much shorter wait time for approval and funding. Online lenders may offer hard money loans or asset-based loans and may not take a business’s credit score into account when making lending decisions.

Online business loans can be an excellent option for businesses with poor credit histories or those that have struggled to obtain financing from traditional lenders. These lenders often rely more on other factors, such as the business’s revenue, its cash flow and the value of its assets.

That said, online business loans often come with higher interest rates than traditional loans and some lenders may charge origination fees or early repayment fees.

Merchant Cash Advances

Merchant cash advances (MCAs) are a popular form of financing, particularly among small business owners who rely on credit card sales. With this type of financing, a provider gives a business owner an upfront advance and then takes a percentage of the business’s daily credit card sales until the advance is fully repaid, with interest.

These financial products are most popular in the restaurant and retail industries, where credit card sales are a significant component of daily operations. With this financing, lenders don’t look at a business owner’s credit score to determine their eligibility for financing. Instead, the focus is on the business’s sales history, so even business owners with less-than-perfect credit can still be eligible for merchant cash advances.

Invoice Financing

Invoice financing and factoring are two alternative lending options that allow businesses to obtain cash quickly without a credit check. With invoice financing, a lender lends money based on outstanding invoices owed to a business.

The lender reviews the invoices and the creditworthiness of the borrower’s customers before offering an advance, typically between 70% and 90% of the invoice’s value. Once customers pay those invoices, the business collects that money and pays off the loan, including interest and fees.

Invoice factoring, on the other hand, is when a lender purchases a business’s outstanding invoices at a discount. The lender assumes the risk of collecting payment from the customer and pays the business an immediate advance, typically 80 to 90% of the invoice’s value. Once the lender collects payment from the customer, it pays back the remaining balance, minus fees, to the business.

In both cases, the lender is more concerned with the creditworthiness of the borrower’s customer than the borrower. Therefore, these financing options are accessible to businesses with less-than-perfect credit scores. By factoring or financing their invoices, businesses can access the cash they need to grow, cover expenses or take advantage of opportunities that require immediate funding.