Credit cards are essential business tools. You use them to manage employee spending and incentivize customers with special offers. However, it's probably not the best idea to use your own personal credit card or even a personal credit line for business expenses. The reality is that many business owners get themselves into financial trouble by using their personal credit cards or lines of credit to fund production costs and business expenses.
This article will go into detail on how to get a business credit card with only an EIN, the pros and cons of getting a credit card, how to apply for it, and why you should NOT use a traditional personal credit card for your business.
What is an EIN?
An EIN is a nine-digit tax ID number that can be used by any business owner to register his or her business with the IRS. Businesses located in the U.S. or its territories may apply for an EIN online; however, an SSN or another tax identifier is required in order to apply. Once assigned, EINs can often be used on loan or credit applications instead of SSNs.
Your EIN stays with your business forever, so you'll need it when filing taxes and opening a business bank account. If you lose your EIN, check previous tax returns or registration papers for the number. If you still can't find it, call 800-829-4933 to speak with an IRS representative.
👉 There are many benefits to using an Employer Identification Number (EIN) in your business. One of the biggest advantages is that it provides an extra layer of protection against identity theft. EINs are connected to businesses, not people, so they have less use for fraudsters.
Can you get a business credit card with an EIN only?
Corporate credit cards are typically available to large businesses without the need for an individual SSN. Small business owners have fewer options when using an EIN alone. Credit card issuers require applicants to have an SSN or an EIN, as well as an SSN for company owners. The IRS issues ITINs and tax IDs to immigrants.
Businesses without credit histories may have to meet additional requirements to get approved for a card using just their EIN. Businesses may have to meet certain capital requirements or generate a certain amount of revenue each month.
Why would a small business need a credit card with an EIN and not an SSN?
A small business might prefer a business credit card using EIN only rather than an SSN for many reasons.
For one, using an EIN rather than an SSN helps to establish a separation between the personal finances of the founder and those of the business.
Another reason that a small business might want a credit card with EIN only is that the founder or owner has poor credit. In that case, they can worry less about whether they’ll be denied startup business credit cards because they don't have to disclose their personal information.
Also, if you're not a U.S. resident, but have an Individual Taxpayer Identification Number (ITIN) and want to get a business credit card, using an EIN is the way to go.
Business credit cards with EIN only: pros and cons
Using an EIN as a line of credit for your business comes with benefits and drawbacks. Read below before applying for business credit cards for LLC EIN only.
Pros of credit cards with EIN only
- It helps you keep business and personal finances separate.
- Also, it helps to establish a solid credit history.
- No personal credit check is done when determining whether to approve your business for a card, so your credit score won’t be affected by the application.
Cons of credit cards with EIN only
- Not so many cards to choose from.
- To get approval for the card, your business may need to meet additional requirements.
- Businesses must meet certain requirements in order to qualify for a credit card.
Why some issuers don’t approve applications with only an EIN
Many credit card issuers require an SSN rather than an EIN. The reason is that they want to make sure that the owners or founders of a business will be personally responsible for any debts incurred by the company. When lenders lend money to startups, they want to protect themselves from losses. They do this by requiring individuals to promise to repay their debts if a business can’t.
Business credit card issuers that require a founder's personal guarantee will consider your personal credit rating when deciding whether to extend a credit card to your business. This way, your personal credit will factor into the size of the credit limit you receive, as well as the interest rate on any outstanding balance.
Business credit cards with EIN for sole proprietors can be obtained, but there are some restrictions. An EIN is required for small business credit cards, but an SSN is not always needed for approval.
How do business credit cards without an EIN work?
Business credit cards without EINs work just like other business credit cards, so you can make purchases for your company easily and manage your cash flow. The cards also come with digital tools that can help you gain a deeper understanding of your company's spending patterns.
Some business credit cards allow you to carry a balance over from month to month, but with interest. Other business credit cards require you to pay off the balance in full each month.
What is a personal guarantee? 🤔
A personal founder guarantee means you have full liability for any debt incurred with a business credit card without a personal guarantee. Credit card issuers can come after your personal assets if your business fails. If you have no business credit history, most business card issuers will require a personal guarantee before giving you a business credit card, and then you can start building business credit with EIN.
How to apply for a business credit card with an EIN?
- Get your EIN
First of all, you need to get an EIN for your business. The state will assign one automatically when you register your business. If you don't have a business yet, you can apply for an EIN online.
- Choose the right card
So, you got your EIN. Now it's time to start looking for card issuers that will approve you with just that number. Your business will most likely need to be registered as a corporation, LLC, or partnership. Then, apply for a business credit card as you would with any other credit card. If you are asked for your SSN, skip the line and fill out the section requesting an EIN instead.
- Apply for the card that suits you best
The final step is to fill in the information about your business: your name, its corporate structure, contact information, size, revenues, and date launched. The card issuer will review and verify your information, then tell you whether you've been approved. It can take minutes or days, depending on the card issuer, and then you can get business credit cards using EIN only.
Types of EIN-Based Business Credit Cards
Some credit card issuers allow you to apply for a business credit card with an EIN only instead of an SSN. The best options are:
Corporate business credit cards
Business credit cards allow you to take on liability through your business. A corporate credit card may be available to you without a personal guarantee. Your business is liable for all of the credit card debt. In some cases, you can get a corporate credit card without an SSN.
Corporate cards have stricter application rules. You'll need to earn a certain profit margin each year, and if you are a sole proprietor, it's harder to find the right corporate card for your business.
Corporate store credit cards
Corporate store cards are credit cards for one specific retailer. These may be worthwhile if you make a majority of your purchases from a single vendor. Corporate store credit cards can offer special deals, such as discounts on purchases, cash back, and points that can be redeemed for rewards.
Corporate gas cards
These cards are only useful at gas stations within a specific network. However, if you run a fleet of vehicles and gas represents a primary expense, consider a corporate credit card for gas.
Prepaid business cards
Business card issuers do not require SSNs from applicants, since prepaid business cards reduce the perceived risk to lenders.
Business credit cards can be a great way to build your company's credit. Prepaid cards are one option, but most businesses prefer the flexibility of unsecured cards.
If you want to keep your business and personal expenses separate, find a business credit card with EIN only that doesn't report to credit bureaus. For example, Karta offers virtual credit cards that help to take control of your business expenses with a range of benefits, including spending limits and budgeting tools. You can restrict employee spending to certain vendors or types of purchases, so you can empower employees to make necessary purchases without compromising policy.
Get started with Karta and enjoy all benefits of virtual credit cards for business.Open a business account
Can I get a business credit card with only an EIN?
Corporate cards can be issued without an individual SSN for larger businesses. Smaller businesses may have to meet additional requirements in order to get approved for a card using just their EIN (like meeting certain capital requirements or generating a certain amount of revenue each month).
Does a business EIN have a credit score?
Your business credit score is tied to an EIN, not your SSN. This helps you keep your personal financial information private while you build and maintain your business credit score. You will need to ensure your business is legally registered in order to obtain an EIN.
How to get a business credit card with EIN?
First, register your business and get an EIN. You will most likely need to register as a corporation, LLC, or partnership. Next, apply for a business credit card just as you would with any other credit card. Fill in the information about your business and wait for approval — it can take a few days.
Can I get a business credit card without SSN?
Some corporate credit cards do not require SSNs. This means you can get business credit cards EIN only, no PG. Corporate cards have stricter application rules; certain types of businesses are eligible, and your business must earn a certain profit margin each year.