Can You Get a Startup Loan With an EIN Only?

Compared with well-established businesses, startup businesses often have a difficult time securing funding. A poor personal credit score on top of that can hurt a startup owner's chances of being approved for a small-business loan.

But startups with good or excellent business credit may be able to apply for loans using the business credit score attached to their employer identification number (EIN), a business tax ID number issued by the government. They may also look for alternative lending options that don’t involve a credit check.

What is an EIN?

Similar to a Social Security number, an EIN is a unique number issued by the IRS to businesses in order to track filings and taxes. EINs are required by every type of business except single-member LLCs and sole proprietors without employees.

Even if you’re not required to apply for an EIN, having one can add to your credibility and help you build your business credit. Applying for an EIN is a simple and free online process.

Lenders that offer startup business loans using EIN

While most banks want to see at least two years in business before approving a loan, these providers offer loan products for startups — businesses in the early stages of growth — with fewer than two years in business and with a low or no personal credit score requirement.

Startup loans you may be able to get with an EIN only

Applications for most business loans consider business owners’ personal credit in some capacity. But there are a handful of funding options that may not — or that have more lenient credit requirements. Here are a few of them.

Online business loans

While online business loans sometimes have lower minimum credit requirements, they don’t typically skip credit checks altogether. Even so, they may be more flexible than banks or the U.S. Small Business Administration if you have at least some business credit history. Most online lenders list minimum credit requirements, so business owners should research and compare before deciding where to apply.

Invoice financing

Invoice financing lets a business owner borrow against their unpaid invoices and depends on the creditworthiness of the business’s customers instead of the business owner. This type of borrowing generally doesn’t hurt the borrower’s personal or business credit score. It can help address short-term cash flow issues by putting money in a business’s pockets before customer invoices are due.

Microloans

Many nonprofits operate in the microlending space. These lenders offer smaller business loans that typically max out at $50,000 and are generally focused on supporting and uplifting small-business owners from traditionally underserved communities. For this reason, microlenders often have more flexible qualification requirements.

For example, although Accion Opportunity Fund has a personal credit score requirement of 600, the lender weighs factors outside of credit score to determine eligibility and accepts applicants with only 12 months of business history. Kiva U.S., another nonprofit offering small-business microloans, determines creditworthiness through crowdfunding efforts rather than personal FICO score.

These smaller loan opportunities can give you access to low-interest working capital that may help tide you over while you build your business history and/or take steps to improve your credit score.

Merchant cash advances

Merchant cash advances give businesses a lump sum of cash that they repay with credit card sales over time. However, they usually come with much higher interest rates than traditional lending options and don’t build your business credit. Unlike loans, merchant cash advances determine a business’s eligibility based on credit card receipts as opposed to a credit score. But because of its high rates, this type of funding should be a business’s last resort.

» MORE: Best merchant cash advance companies

How to apply for a startup loan with an EIN

Leverage your business strengths

Most small-business lenders look at personal credit and financials when evaluating loan applications. Business owners who prefer to apply with just an EIN, leaving the personal side out of the equation, can emphasize strong points about their business, such as a good business credit score or long financial history.

Lenders may also consider annual revenue, financial statements, business plans and collateral in lieu of personal financials and credit score. A personal guarantee, which is a promise that you will personally repay the loan if your business cannot, can also strengthen your application, and is required by many lenders.

Build business credit

For startups that haven’t been established long enough to build their business credit or demonstrate a history of financial success, it’s important to start building business credit as soon as possible. A startup business owner can build their business’s credit by applying for a business credit card with their EIN, establishing trade credit with vendors and paying their credit card bills off in full each month.

» MORE: How to get a business credit card with an EIN only

Consider alternative funding options

For those who don’t have time to build their business credit, another option is applying for business loans that don’t require a credit check. However, the cost of borrowing in these situations is often high, and many of these options might come with other requirements that startup owners may not be able to meet.

» MORE: Business loans for companies with low revenue

Pros and cons of startup business loans with EIN numbers only

Pros

✅ No personal credit check. If you are facing personal credit challenges, or want to avoid a personal credit pull for other reasons, you can still get funding with an EIN and business credit. 

✅ Easier to get funding. Many no credit check loans rely on things other than financials, like the value of outstanding invoices, so it can be easier to get approved. 

✅ Easier application. Because lenders don’t need to look at personal financials, the application process and collection of documents for no credit check business loans can be easier than traditional loans. 

Cons

❌ Can be expensive. One way lenders may try to mitigate risk of foregoing a personal credit check or lending to a borrower with less than stellar credit, is by raising fees and rates. 

❌ Can be difficult to find. Most traditional lenders like banks don’t offer loan options without credit checks. Alternative financing can be risky, and reputable lenders, invoice financing or MCA companies can be difficult to find. 

❌ Can put your new business at risk. Due to higher fees and APRs that are common with no-credit-check loans, you could be putting your new business at risk, especially if you’re getting a loan during a crucial growth stage.