business loan

Here’s How to [Actually] Get Business Credit With Just an EIN +More Options

Lately, I’ve found quite a bit of online content that pertains to getting business credit with just your EIN, and I’ve seen some pretty good information. But, I haven’t found a thorough answer to the core question, which is, “How can you get business credit using your EIN and not your SSN?”

First of all, if you’re not up-to-date with the lingo, what you’re essentially looking for here is business credit without a “personal guarantee.” Luckily, there are lenders that do not require a personal guarantee for business financing, but most of the good options are not common nor easy to find. So, let’s explore everything you need to know.

Here’s what’s in store:

In Business Credit, What is a Personal Guarantee?
What if You Aren’t Eligible for an SSN?
What if You Have Bad Personal Credit?
How Can You Use Your EIN Instead of Your SSN to Get Business Credit and Loans?
Lenders That Offer Financing With No Personal Guarantee
Final Thoughts

In Business Credit, What is a Personal Guarantee?

When a business takes out an unsecured loan or line of credit, most lenders want assurance that the funds will be paid back. A personal guarantee is a promise that, should the business fail to repay, the individual will be responsible for the debt. This responsibility typically falls on a company executive or business owner.

With a business loan or line of credit for which you are the personal guarantor, the lender has a legal right to your individual assets if your business does not repay the debt as agreed. In order to legally collect the funds in this case, the lender needs your social security number (SSN).

Your SSN often serves a second purpose, which is to see if you have shown responsible credit behavior with your personal finances. Really, lenders just want to make sure you are responsible even when your business is obviously financially healthy.

💡 Does Your EIN Have a Credit Score? Your business has it’s own public credit score, separate from your private personal FICO score. To learn more about the oldest and most-used business credit bureau, see Everything You Need to Know About a DUNS Number & Why Should You Care.

What if You Aren’t Eligible for an SSN?

If the reason you want a business credit card is that you don’t have a social security number — perhaps you’re a nonresident of the United States doing business here — you can take another route to bypass the SSN section of a credit card or loan application. In this case, you need to file for an Individual Taxpayer Identification Number (ITIN) through the IRS.

Several credit lenders allow you to apply for funding using an ITIN instead of an SSN. I recently did a write-up on one of them and you can find more about it (and competitors) here: Chase Ink Business Preferred Credit Card: A Deep Dive.

To apply for an ITIN, use IRS form W-7. Consult with a CPA licensed in the state where you do business to find out more as it applies to your situation.

What if You Have Bad Personal Credit?

Another reason you might want to apply for business credit using your EIN and not your SSN is that you have a low FICO score. If you’re in this boat, there are steps you can take to remedy the predicament. These steps will vary based on your situation.

In all cases, the first step will be to learn about the common errors often reported by consumer credit bureaus and leverage them to your advantage. For example, you might learn how to best deal with vehicle repossessions and defaulted loans or what can be disputed in a credit file and how to do so.

How Can You Use Your EIN Instead of Your SSN to Get Business Credit and Loans?

If you want to get a line of credit for your EIN and withhold your SSN, as you probably guessed, you need to find a lender that does not require a personal guarantee. Then, you will need to meet the credit and income requirements of that lender. Finally, you’ll need to apply.

Lenders That Offer Financing With No Personal Guarantee

As I’ve already said, lenders that do not require a personal guarantee are uncommon. But, they’re not impossible to find. Here’s a list of a some lenders who may not require an SSN or an ITIN to apply for a line of credit or a loan.

Business Credit Cards

These business credit cards are fairly easy for companies of all sizes, including freelancers and individual contractors, to qualify for and require no personal guarantee.

Sam’s Club Business Credit Card
Office Depot OfficeMax Business Credit Account
Shell Small Business Gas Card
SuperAmerica Fleet Credit Card

Corporate Credit Cards

Rather than base your credit limit on your FICO score, you may be able to meet revenue requirements for one of these corporate cards with no personal guarantee. You may need an actual S or C corporation to qualify (in some cases, an LLC might suffice).

Brex Rewards Card
Stripe Corporate Card – see our full write-up here.
ScaleFactor Visa Charge Card
Bremer Bank Business Card
American Express Corporate Cards
Capital One Corporate Cards
Citibank Corporate Cards
JP Morgan Chase Corporate Cards
Wells Fargo Corporate Cards

Business Loans

While you may be required to share your SSN during the initial application process to ensure that you meet minimum credit requirements, these lenders have funding options that require no personal guarantee.

Kabbage
Fundbox
StreetShares – requires no personal guarantee for government contractors and subcontractors to Fortune 500 companies.

Alternative Financing [Proceed With Caution]

First, when you don’t qualify for a business loan or line of credit, you can try for a personal loan or credit card instead. In fact, many companies are funded with personal capital. But, personal credit is typically more limited as far as funding amount and rewards than business credit.

Next, if you have a friend or family member willing to extend a loan to your business, you may be able to request a private contract without using your SSN and with no personal guarantee. Most people avoid this to protect perfectly healthy relationships rather than muddy them with potentially disastrous business affairs.

Then, depending on your type of and stage in business, you may also find VC or Angel investors willing to extend funding, which typically requires formal pitching and a detailed plan that outlines how you will use the money to increase company profits. In nearly all cases, investors also require a certain level of control over business management and a share of the revenue. So, if you want to maintain your operations as is (and keep your profits for yourself), this isn’t a great option.

Finally — and I hesitate here — it may be worth mentioning that other options include working capital financing or merchant cash advances. In rudimentary terms, you can take out an equity loan on accounts payable. However, I do not recommend these channels. Repayment on these types of loans is overly-expensive akin to personal payday loans.

Final Thoughts

Business lenders that provide practical funding solutions you can apply for using only an EIN are unicorns in the financial universe. But, if you’ve made it here, you should know everything you need to find one. If you’ve tried, but still can’t seem to qualify for financing, there’s plenty you can do to transform your situation.

And, if you know of other lenders who require no personal guarantee, I’d love to hear about them. For now, I recommend you learn how to build business credit so that you can access high-limit loans and credit cards with the best possible rates. If you want to learn how to obtain $100K in business credit in 30 days, I invite you to join Business Credit Workshop today.

How to Get an SBA Business Loan

By Joe Lawrence

Since the Great Recession of 2008, small business owners have had a difficult time securing financing, and that’s made it nearly impossible for many to to start or grow a business. As a result, many alternative financing companies have popped up, but unless you take precautions, you can end up paying exorbitant amounts of interest with these types of loans. Luckily, the Small Business Administration (SBA) is still in the market of helping entrepreneurs and small business owners get the cash they need.

But in order to be successful with an SBA loan application, you must understand the process and have a firm grasp of the steps you’ll need to take. Here’s a breakdown of the entire process.

What Role Does the SBA Play in Lending?

It’s important to note that the SBA doesn’t actually grant loans to businesses, but instead guarantees most of the loan (75-85 percent) to the lenders who do. Because of this guarantee, lenders have less risk so they are typically able to relax their loan guidelines and extend lower interest rates. The SBA currently works with about 500 banks in the U.S. that lend to small businesses. When looking for an SBA small business loan, it makes sense to start with your local bank if you have a good relationship with someone there, and ask if they’re an SBA lender. If not and you need to expand your search, the SBA offers a lender search tool and a current list of the top 100 most active SBA lenders in the country.

What Types of Loans Does the SBA Guarantee?

No two businesses are the same—they vary in size, years in business, and financial obligations and needs. In order to support all types of businesses, the SBA backs three specific types of business loans.

Basic 7(a) Loan Program. If you’re just starting a business, plan to purchase one, or are expanding your current business, this is the loan you should apply for. It’s the most common of the loan programs offered by the SBA. You can find out more information about these types of loans by visiting the SBA’s general loan page.
Microloan Program. If you need $50,000 or less to start or grow a business, a microloan will likely fit your needs. These loans are made by nonprofit community lenders, but are backed by the SBA. Borrowers typically need collateral in order to secure these loans, and many lenders ask for a personal guarantee from the business owner. The typical microloan amount is $13,000. You can learn more about microloans on the SBA microloan program page.
Certified Development Company (CDC) 504 Loan Program. The CDC 504 Loan Program offers loans to business owners who need to purchase fixed assets in order to expand or modernize their business. Its goal is to promote economic growth in communities across the country. Find out more on the SBA website.

What are the Eligibility Requirements to Get an SBA Loan?

While the above types of loans can apply to most business owners, the SBA has certain requirements that generally must be met in order to qualify for a loan. For instance:

The business must be small and operate to make a profit.
You must do business in the United States.
Personally invest a reasonable amount of equity in the business.
Utilize other financing methods, such as using your personal assets, before applying for the loan.
Demonstrate a need for the loan and use the loan proceeds for a sound business purpose
Not be delinquent on any debt obligations to the U.S. government.

Check Your Credit Reports before You Apply

Once you’ve determined the type of loan you want to apply for and confirmed that you meet all the eligibility requirements, it’s time to begin the process of applying for your loan.

When you apply for an SBA backed loan, the lender will ask to see both your personal and business credit reports. Before you begin the loan process, it’s wise to request copies of your report so you can clear up any inaccuracies before the lender sees them. Although the reporting agencies have great systems in place, sometimes mistakes happen and errors can end up on your report, which could hamper your ability to get a business loan. You can get copies of your personal credit report for free from all three reporting agencies, and you can purchase your business credit profiles from Dun & Bradstreet, Experian, and Equifax. In order to understand the process of checking your business credit profiles, read our post on the subject.

What Documentation Do You Need to Apply for an SBA Loan?

Next, you’ll need to gather all the documents you’ll need in order to submit your application to the lender. Not every lender requires the same information, but in general, here’s what you’ll need to provide:

Personal background information. The lender will ask you to provide personal information for each partner, such as former addresses, other names used, criminal histories, and educational backgrounds.
The personal and business credit histories for every owner of the business.
Many lenders ask for at least one year of bank statements.
Expect to provide the lender with a minimum of three years of income tax returns.
Depending on how your business is structured, a lender may ask you to provide certain legal documents, such as business licenses or certifications, articles of incorporation, ongoing contracts with third parties, commercial lease contracts, and franchise agreements.
You’ll need to provide the lender with a thorough and well thought out business plan. Your plan should include all of the typical components, such as an executive summary, company overview, product or service description, market and competitor analysis, marketing plan strategy, organization and management team, and your financial plan for the business.
The lender will also want to see projected financial statements and cash flow projections for at least one year, as well as your personal and business financial statements.
Most lenders will ask for a personal guarantee from you and your partners, especially if they own more than 20 percent of the business.
If you’re starting a new business, the lender may ask for a resume for you and any partners to judge your experience in relation to the business you plan to start.
If the lender requires collateral, you will be asked to provide a collateral document that outlines the details of the personal or business property you intend to use to secure the loan. You’ll need to provide the value of the items.

There are many forms to fill out with an SBA Loan, since it’s government backed financing!

Fill out the Required Lender Forms

Next, you’ll be asked to complete some documentation for the lender in order for your loan to be processed. The forms you’ll be asked to complete are:

Application for Business Loan. This is the main loan document, and you will have to provide many attachments to complete it.
Schedule of Collateral. This document details the personal assets you plan to use as collateral.
Statement of Personal History. The lender will use this form to evaluate your character.
Personal Financial Statement. The lender will use this form to evaluate your financial health.
Fee Disclosure and Compensation Agreement. If you hired someone to help you submit your SBA loan application, you’ll need to fill out this form and state how much you paid for those services.

Don’t Be Afraid to Ask for Help

Although applying for an SBA loan comes with less stringent requirements than with a traditional lender, the process can be cumbersome. If you need help with the process, the SBA partners with a variety of organizations that can walk you through the process.

This is a national organization that provides counselors, mentors and advisors to small business owners free of charge. Visit this page to find a SCORE office near you.
Small Business Development Centers (SBDCs) offer free business consulting services and low cost training to aspiring entrepreneurs. There are about 900 locations nationwide. You can find a list of them by state on the SBA website.
SBA District offices. You’ll find at least one of these in each state, and they can help guide you through the loan process. Visit this page to find an office located in your area.
Women’s Business Centers (WBCs). There are over 100 of these centers across the country, and they exist to help women who are starting or running a business. You’ll find a state-by-state list on the SBA website.

Applying for SBA financing is just like any other loan application process—you’ll need to be prepared and armed with the facts in order to convince the lender you’re a good candidate for a loan. Do some preliminary work before you begin the application process, such as checking your credit reports and gathering the documentation you need, and you’ll be one step ahead of the game. And don’t forget, in today’s economy with so many banks refusing to lend to business owners, SBA loans can be your ticket to a brand new business or an expansion of your current one.

How to get a Business Loan [Video]