When you apply for business funding, most lenders want you to provide your Social Security Number (SSN), undergo a credit check, and personally guarantee your debt. That might minimize your lender’s risk, but it’s less desirable for you as a borrower.
To get a business loan with an EIN only, you’ll have to separate your business and personal finances and establish a healthy business credit profile. Here’s everything you need to know to go about it successfully.
What EIN Only Means
Getting a business loan with an Employer Identification Number (EIN) only means you don’t give your SSN to the lender except to verify your identity. As a result, you don’t have to submit to a credit check or sign a personal guarantee to qualify for the account.
In most cases, lenders would prefer that you use your SSN to complete your application rather than an EIN because it better protects their interests.
After all, most small business owners are deeply entangled with their businesses, and it’s hard to separate their respective finances and credit. For example, a sole proprietor and their business are often essentially the same entity.
In such cases, it’s risky for a lender to ignore a small business owner’s personal credit history. If they have poor credit because of an unmanageable personal loan, their business’s cash flow will inevitably suffer.
Your personal guarantee also makes loans much safer for your lender. If your business ever defaults, they can come after your personal assets to recover their losses, such as your house, car, or bank account.
To convince them to give up their safety nets, you need to have a high business credit score, well-established tradelines, and a clear separation between your business and personal identities.
The Requirements to Use Only Your EIN
To get a small business loan or business line of credit with an EIN only, you’ll need to develop a substantial business credit profile and a solid financial foundation. Here are the criteria that lenders typically consider:
- Business credit scores
- Number of financial tradelines
- Annual revenue
- Time in business
- Legal entity structure
Now, let’s take a look at the requirements you’ll need to meet in each of those areas to get business credit using your EIN only. First and foremost, you’ll want to have at least good, if not excellent, business credit scores.
Here are the five scores lenders are most likely to check, plus the agency or credit bureau that provide them, their scoring ranges, and the score you should aim to beat.
The Top 5 Scores and Providers Lenders Check
| Credit Score | Provider | Scoring Range | Target Score |
| PAYDEX | Dun & Bradstreet | 0 to 100 | 80 |
| Intelliscore Plus | Experian | 0 to 100 | 76 |
| Small Business Scoring Service (SBSS) | FICO | 0 to 300 | 180 |
| Business Delinquency Scoring Service (BDSS) | Equifax | 101 to 650 | 585 |
| MasterScore | PayNet | 500 to 800 | 700 |
As for financial tradelines, you should aim to have at least three. Any less, and you may not be able to generate some business credit scores. Of course, the more you have and the longer their positive history, the better.
To clear the time in the business requirement, most traditional lenders want to see at least two years under the current ownership to qualify with an SSN. They don’t publish their requirements for EIN-only loans but know that you’ll need to beat that.
Online lenders are usually willing to work with you after one year, but their interest rates are significantly higher.
Next, $100,000 in annual revenue is the typical baseline to get a small business loan from banks and credit unions with your SSN, but they might want to see as much as $250,000.
If you’re going to use your EIN only, you’ll likely need to earn significantly more than that. For context, EIN-only corporate credit card programs usually require $4 million in annual revenue.
Finally, your business’s legal structure should be something other than a sole proprietorship or a partnership. In other words, you’ll need to be a C-corporation, S-corporation, or limited liability company (LLC).
Keep in mind that these are the minimum requirements necessary to get a loan using only your EIN. Meeting them doesn’t necessarily guarantee you’ll qualify for a loan, and the requirements may vary between lenders.
The Requirements to Qualify for SBA Loans
The Small Business Administration (SBA) partners with qualified lenders and insures their loans for up to 85% of their principal value, as long as they meet the SBA’s criteria. Many see SBA loans as the gold standard for business loans.
The most popular option is the SBA 7(a) loan program, which provides flexible term loans and revolving lines of credit up to $5 million. The SBA caps their interest rates, so they may be more affordable than other financing options.
Unfortunately, it’s impossible to qualify for one with your EIN only. The SBA requires a personal guarantee from everyone who owns more than 20% of the business.
However, if you want to get a business loan with your EIN because you have bad credit, they may still be an attractive option. You can often receive credit approval for an SBA loan with a poor personal credit score.
Using the same criteria we discussed before, here are some goals you should try to reach:
- SBSS credit score: 155
- Number of financial tradelines: 3
- Time in business: Two years
- Annual revenue: $100,000
- Legal entity structure: Any, but corporations and LLCs preferred
Be aware that you must meet SBA eligibility criteria and your lender’s requirements to qualify. Fortunately, SBA lenders may be more flexible because the SBA guarantees their loans, so don’t give up if you don’t quite fit into the list above.
How to Build Your Business Credit
Building your business credit scores is essential to qualifying for a business loan with your EIN only. Here’s how to build business credit to the necessary levels.
Separate Your Personal and Business Identities
It’s always best to separate your business from yourself to establish it as its own entity. It’s the first step to building business credit and being able to qualify for accounts with your EIN only.
Set your business up with its own name, address, phone number, EIN, and DUNS number. You should also consider registering your business as a corporation or an LLC since they’re easier to fund than sole proprietorships and partnerships.
Separate Your Personal and Business Finances
The benefits of establishing a separate identity for your business diminish significantly if you don’t keep your finances separate as well. Open a business bank account and credit card to keep its funds from mingling with yours.
It’ll help you qualify for more significant credit accounts under your business’s name in the future, make your accounting processes easier, and keep your financial statements in order for tax time.
Get Financial and Vendor Tradelines To Build Your Business Credit
Once your business is well-established as a separate entity, it’s time to start building its business credit profile by acquiring tradelines, which is just another name for a credit account on your credit report.
There are two types of tradelines for business credit:
- Financial tradelines come from lenders, such as a bank
- Vendor tradelines come from a company you work with, such as a supplier
It’s always best to get at least a few of each type of tradeline to optimize your business credit scores.
Net 30 accounts are often the easiest way to get vendor tradelines. That means you’ll have 30 days to pay off your accounts. You can find plenty of vendors willing to accept new businesses.
As for financial tradelines, Credit Strong’s credit builder loan for businesses is a great option. You can get a $10,000 installment tradeline on your credit report and build up to ten months of payment history for as little as $115 per month.
We don’t need to check your credit because we keep the loan funds in a savings account as collateral for the loan. We’re also happy to work with businesses as young as three months, as long as you’re a corporation or an LLC. Give it a try today!
Easy Options for EIN Only Financing
Once you have a decent business credit score, here are some financing options you’ll likely be able to qualify for using your EIN only.
Business Credit Cards
While they don’t all allow it, you can qualify for some business credit cards without supplying your SSN, undergoing a personal credit check, or signing a personal guarantee.
Some options include:
Of course, you’ll need to have a separate business identity and sufficient business credit to qualify for a business card with your EIN only. Make sure you consider each account’s annual fee and credit limit before you commit.
Corporate Credit Cards
Business owners usually get corporate credit cards to distribute to their employees. That makes it easier for workers to get reimbursed for the business expenses they have to pay for and streamlines the accounting process.
Some examples from notable lenders and credit card companies include:
- The Brex Rewards Card
- Capital One’s One Card
- Stripe’s Corporate Card
- The American Express Corporate Green Card
Generally, only large companies can qualify for corporate credit cards. In addition to a good business credit score, you’ll need to earn at least $4 million in annual revenue for most, though the Brex and Stripe cards are exceptions.
Alternative Business Financing
If you’re open to alternative lenders and financing strategies, it may be easier for you to qualify for them than a traditional bank loan with your EIN only. Some popular examples include:
- Invoice factoring: Selling off invoices at a discount instead of waiting for customers to pay.
- Equipment loan: A term loan for buying equipment that uses the acquired property as collateral.
- Merchant cash advance: A cash advance that usually requires a portion of your ongoing sales instead of a fixed monthly payment.
While these might be easier to obtain without an SSN, they often have significantly higher financing costs. Before applying for an untraditional financing option, make sure the higher interest rates and fees are worth it.
FAQs
Does This Work if You Have Bad Personal Credit?
Yes, you can get a business loan with an EIN only if you have poor personal credit. However, having good credit can boost your chances of getting business credit in general, so you should work on improving it.
Our MAGNUM accounts are perfect for people who want to increase their personal credit to further their business credit goals. Give it a try today!
Can I Use My EIN Instead of SSN When Applying for Credit?
In most cases, your lender will want you to apply for credit with your SSN. Unless your business is well established as a separate entity with a great credit score, they’ll use your SSN to check your personal credit and extract a personal guarantee from you.
Even if you do manage to qualify for an account with your EIN only, they’ll usually want your SSN anyway to verify your identity in compliance with Know Your Customer laws. If you don’t know why your lender wants your SSN, ask before applying.
What Is a Good Business Credit Score?
There are many business credit scores, and each one has its own rating system. Here are some of the most popular scores plus what lenders generally consider a good rating for each one:
- Dun & Bradstreet’s PAYDEX: 80
- Experian’s Intelliscore Plus: 76
- FICO’s SBSS: 180
- Equifax’s BDSS: 585
- PayNet’s MasterScore: 700
Keep in mind that acceptable business credit scores vary significantly between lenders.
