Can I use an EIN to Apply for a Small Business Loan?

Ezra Cabrera | February 2, 2024


    Getting a small business loan can be tricky, especially if your personal credit score isn't great and your business is still new. Most lenders check your personal credit score, and if it's under 650-700, traditional banks and the Small Business Administration may hesitate to give you a loan.

    But here's a solution: find a lender that looks at your business's credit score instead. To do this, you need to get an Employer Identification Number (EIN) and build a separate business credit score.

    In this article, we'll walk you through the steps to get an EIN and establish your business credit score. Then, we'll explore the loan options available when your business has a strong credit history.

    What is an EIN?

    An Employer Identification Number (EIN) is a unique identification number issued by the IRS. It serves as a way for the IRS and other federal and state agencies to keep track of your business for various purposes, including tax filings.

    While some businesses legally require an EIN, it's best to get one regardless of your legal obligations. Having an EIN is necessary before you can start building your business credit. Getting an EIN is free, and you can easily request one from the IRS. It's a smart and essential move to separate your personal and business finances while setting the stage for your business's financial success.

    Can I use an EIN to Apply for a Small Business Loan?

    Yes, you can use an Employer Identification Number (EIN) to apply for a small business loan in certain situations. If you're running a startup with a strong business credit score, you might be eligible to apply for loans using your EIN. However, for most self-employed individuals and small business owners, relying solely on an EIN for a loan isn't typically an option.

    Lenders will consider your EIN as a factor in the lending decision, but they'll also look at other factors, such as your personal credit score and business credit history. It's important to note that if you're using only an EIN, it may take some time to establish a solid business credit history.

    Moreover, individuals who don't have a Social Security Number (SSN) can still get business loans using just an EIN through specific financial institutions. This can be especially relevant for self-employed individuals and small business owners looking to secure financing for their ventures.

    Ready to Apply for a Small Business Loan?

    Pros and Cons of Applying for Loans with an EIN

    When applying for loans with an EIN, there are several pros and cons to consider.


    No Personal Credit Check

    Loans using an EIN typically don't require a personal credit check. This can be a plus if your personal credit history is limited or not great.

    Separation of Finances

    Using an EIN keeps your personal and business finances separate. It safeguards your personal assets in case your business faces financial challenges.

    Building Business Credit

    Obtaining loans with an EIN and making on-time payments helps establish and improve your business credit history. This can be advantageous for future loan applications and better loan terms.


    Limited Loan Options

    Not all lenders offer loans with an EIN, which can restrict your access to certain loans or lenders.

    Higher Interest Rates

    Due to perceived higher risk, EIN-based loans might come with higher interest rates than loans requiring a personal credit check. This could mean higher borrowing costs for your business.

    Personal Guarantee Requirements

    Some lenders, especially for startups or businesses with limited credit history, may still ask for a personal guarantee or collateral for EIN-based loans. This means you might still be personally responsible for repaying the loan if your business defaults.

    How To Apply for a Business Loan With an EIN

    For new business owners without a credit history, you can use your EIN to apply for a business loan. However, you may also be required to provide your Social Security Number (SSN) and personal financial information, as lenders may ask for a personal guarantee.

    On the other hand, if your business is well-established with a strong financial track record, you could qualify for a loan based on your EIN and business credit score.

    • 1. Check Your Credit

      Business credit scores typically range from 0 to 100, with some going up to 300 (like FICO business scores). If your score is low or you don’t have one, consider improving by paying off existing business debts or using a small business credit card responsibly.

    • 2. Decide on the Loan Type

      Determine the type of loan that best suits your needs. Loans can vary in terms of interest rates, repayment terms, personal guarantees, and collateral requirements.

    • 3. Gather Documentation

      Be prepared to provide additional documents for verification. This often includes your business’s financial records, such as your business plan, financial statements, tax returns, and other relevant information, demonstrating its ability to repay the loan independently.

      Show that your business is stable and has the potential to generate sufficient revenue by providing financial projections, showcasing a strong business model, or highlighting your industry experience.

    • 4. Choose a Lender and Apply for Business Loans with EIN

      Shop around for lenders that offer the funds you need with terms that fit your timeline and budget. Look for those who provide business loans that accept EIN instead of solely relying on personal credit.

      Once you’ve selected a suitable lender, visit their website to begin the loan application process. Provide accurate and complete information about your business. Depending on the lender’s requirements, you may need to offer collateral or a personal guarantee to secure the loan.

    • 5. Review and Negotiate Loan Terms

      Carefully review the loan terms, including interest rates, repayment terms, and fees. If possible, negotiate terms that are favorable for your business.

    • 6. Submit the Application and Wait for Approval

      Once you’ve completed the application, submit it to the lender for review. Be prepared to answer any additional questions or provide further documentation if requested.

      The lender will review your application, credit history, and other factors to determine whether to approve your loan. This process may take some time, so be patient.

    • 7. Receive Funding

      If your loan is approved, you’ll receive the funds in your business account. Use the funds responsibly and manage your loan repayment according to the agreed terms.

      Remember that each lender may have specific requirements and processes, so it’s important to research and choose the right lender for your business needs.

    Business Loans That Don’t Rely on Credit Checks

    Getting a loan using only your Employer Identification Number (EIN) is possible, but these loans still consider your business's creditworthiness. However, there are alternative ways to secure financing that doesn't rely heavily on your personal or business credit.

    Online Business Loans

    Online business loans simplify the process for businesses looking to apply for EIN-based financing, especially with poor credit. These loans are more accessible because they offer solutions that look beyond your credit score; they take into account your business performance, cash flow, and growth potential. This means that even if your credit history isn’t perfect, you can still get the funding you need based on your business’s health and potential.

    What makes online loans even more appealing is their convenience and speed. The application process is user-friendly and can be completed online, saving you time and effort. Plus, approval times are often quicker, making online business loans a great choice when you need fast access to funds for seizing opportunities or handling emergencies.

    With flexible loan terms and access to specialized lenders, online business loans offer a practical and straightforward way to obtain EIN-based financing that suits your unique business needs.

    Invoice Financing

    Invoice financing lets businesses get quick cash by using unpaid invoices as collateral. Here’s how it works: a lender gives you a portion of the money you’re owed upfront, usually around 80% to 90% of the invoice total. Then, when your customer pays the invoice, you get the remaining amount, minus a small fee.

    Invoice financing doesn’t rely heavily on your personal or business credit history. So, even if your credit isn’t stellar, you can still use your invoice to access funds. It’s also fast, making it great for covering expenses or seizing opportunities.

    Turning unpaid invoices into usable cash reduces the need for long-term debt and helps you maintain a healthy cash flow. Invoice financing is a versatile and practical way to handle short-term cash needs. It is a dependable alternative to traditional loans, especially if you’re looking for fast and credit-friendly financing.

    Purchase Order Financing

    Purchase order financing is a helpful financial solution for small business owners, especially when they encounter sizeable customer orders but lack the funds to fulfill them. Here’s how it works: A specialized financing company provides the money to pay suppliers for the goods required to fulfill customer orders.

    This financing often covers a substantial portion of the order cost, typically ranging from 50% to 100%. Once the products are delivered to the customer and the invoice is issued, the business repays the financing company, usually with a fee involved.

    Purchase order financing allows businesses to seize growth opportunities without accumulating long-term debt. Instead of taking out loans, businesses use their existing orders as collateral to secure funding, which is particularly helpful for startups or those with limited credit histories. With purchase order financing, the focus is on the creditworthiness of your customers – not your own credit history.

    This financing option is a lifeline for businesses that face occasional surges in demand. It enables them to fulfill substantial orders, keep customers satisfied, and maintain a healthy cash flow.

    Merchant Cash Advances

    Merchant cash advances (MCAs) are a simplified form of business financing where a company receives a lump sum of cash up front, typically used for immediate needs, in exchange for a portion of future credit card sales and a fee.

    Here’s how it works: A business owner agrees to sell a part of their future credit card sales to a financing company. The financing company then provides a lump sum of cash, which the business can use immediately. The repayment happens daily or weekly, with a fixed percentage of the business’ credit card sales deducted until the advance and the fee are fully paid off.

    MCAs are appealing for their accessibility and speed, making them suitable for businesses that require rapid capital injection or lack strong credit histories. However, MCAs typically have higher fees and shorter repayment periods than traditional loans. You need to carefully assess your financial situation and the terms before proceeding.

    Business Credit Card

    A business credit card provides a flexible source of funding. You can use it for various expenses, including inventory purchases, equipment, or working capital. Similar to loans, business credit cards offer revolving credit, allowing you to carry a balance over time. They also come with credit limits that can be beneficial for managing expenses. However, it’s important to be cautious about high interest rates on unpaid balances and to monitor spending to avoid accumulating debt.

    Personal Credit Card

    Individuals may sometimes consider using personal credit cards as an alternative to business loans, especially if they have strong personal credit. Personal credit cards can offer quick access to funds for business expenses.

    However, keep personal and business expenses separate, as commingling finances can lead to complications during tax time. Personal credit cards may also have lower credit limits than business credit cards. This can limit the amount of funding available for your business.

    Friends and Family

    Turning to friends and family for financial support is another alternative to traditional business loans. This option may be especially viable for startup businesses or those with limited credit history. Friends and family can provide loans or investments to help your business grow.

    But this approach involves personal relationships and financial risk, so be sure to have clear agreements in place, preferably in writing, to avoid misunderstandings or strained relationships in the future. Treat such arrangements with the same level of professionalism and seriousness as you would with traditional lenders.


    Using your EIN to secure a small business loan can be challenging – but not impossible. You’ll need to find the right lender, develop a strong business plan, and demonstrate reliable financials to make it work.

    Choosing and applying for the best EIN business loans can be confusing. Our expert financial advisors are here to assist. We offer free, no-obligation consultations to help you explore options and create a financial strategy tailored to your goals.

    Reach out to us at 888-853-8922 or email us at info@smbcompass.com, and we’ll get in touch with you as soon as we can.

    About the Author

    Ezra Neiel Cabrera has a bachelor’s degree in Business Administration with a major in Entrepreneurial Marketing. Over the last 3 years, she has been writing business-centric articles to help small business owners grow and expand. Ezra mainly writes for SMB Compass, but you can find some of her work in All Business, Small Biz Daily, LaunchHouse, Marketing2Business, and Clutch, among others. When she’s not writing, you’ll find her in bed eating cookies and binge-watching Netflix.