Business credit cards have become an essential tool for small business owners who need access to short-term capital, as well as the ability to manage company expenses. Business owners who want to apply for credit cards quickly and conveniently are often confused about whether they can get business credit cards using their EIN only.
Business owners want to know whether they can get business credit cards without providing additional information such as Social Security numbers, employment history, financial statements, and tax returns. Knowing if and how to access business credit cards using only a business EIN can be a tricky area for many small business owners. In this article, we’ll discuss how business owners can get business credit cards using only their EIN, as well as the pros and cons of doing so.
What Is an EIN?
EIN stands for Employer Identification Number, and it’s a required nine-digit number issued by the IRS. EINs are used to identify different entities and businesses. Businesses need an EIN in order to file taxes, open bank accounts, and obtain business credit cards, among other key activities.
If your business is a sole proprietorship or a single-owner LLC, you can use your Social Security number as your EIN, instead of obtaining a separate EIN. Additionally, there are non-self-employed business entities that must obtain an EIN, including partnerships, LLCs, corporations, and nonprofits.
Can You Get Business Credit Cards Using EIN Only?
Yes, businesses can get business credit cards using their EIN only. Using an EIN to get a business credit card is the same process that’s used when applying for personal credit cards. The only difference is that the EIN is used instead of a Social Security number.
However, it’s important to note that not all business credit cards offer the ability to apply using an EIN only. Each credit card issuer has their own policies in regards to what information they require to grant credit. Some issuers may require additional documentation, such as financial statements or company tax returns.
Benefits of Using an EIN to Get a Business Credit Card
There are several benefits to obtaining a business credit card using only your business EIN. These are the most notable benefits:
1. Increased Security: Using an EIN to obtain a business credit card eliminates the risk of fraud, as someone would need the business’ EIN to open a card in the name of a business. This is especially beneficial to business owners who don’t want their personal information exposed during the application process.
2. Easier Application Process: Applying for a business credit card using only your business EIN can make the application process easier and faster. You won’t have to provide your personal information, which can save time and provide a more convenient experience.
3. Improved Credit: By using a business credit card and keeping your personal credit separate from your business credit, your personal credit score won’t be affected if your business falls into financial difficulty. Additionally, it can show lenders that your business is a legitimate entity and not simply an extension of your personal finances.
Drawbacks of Using an EIN to Get a Business Credit Card
As with any other financial decision, business owners should be aware of the potential drawbacks to obtaining a business credit card using only their business EIN. These are the most notable drawbacks:
1. Limited Credit Availability: Not all business credit cards offer the ability to apply using an EIN only. As such, you may be limited in the types of cards you can get. Additionally, credit card issuers may not be as willing to extend credit to businesses with only an EIN.
2. Difficulty Obtaining a Business Loan: Credit card issuers often use your credit score when making decisions about extending a loan. By having a business credit card in your name and business EIN, you are essentially hiding your credit score from the issuer.
3. Difficult to Monitor: It can be difficult to monitor and manage spending when you use an EIN to get a business credit card. Business owners often have to rely on outside bookkeepers or accountants to accurately track expenditures on the card.
Using an EIN to get a business credit card can be a convenient way for business owners to access short-term capital. While there are several notable benefits to this process, such as increased security, faster application process, and improved credit, there can also be drawbacks, such as limited credit availability, difficulty obtaining a business loan, and difficulty in monitoring and managing spending. Therefore, it’s important for business owners to weigh the pros and cons before applying for a business credit card using only their EIN.