How to Get a Business Loan & Business Funding with an LLC & EIN

Business loans are vital to a small business’s success. These financial products provide them with the necessary funding to grow and expand their operations.

Unlike big corporations with multiple shareholders investing capital, small business owners typically rely on business loans to recoup startup costs, purchase inventory, and hire employees.

However, securing these business loans is not a simple task. Most lenders are stringent, often requiring a good business credit score. The good news is that some banks’ criteria for approval are an employer identification number (EIN) and a limited liability company (LLC) structure. These two components can significantly enhance your chances of loan approval.

Below, we’ll discuss how to get a business loan with an EIN and an LLC. We’ll also enumerate the different business loans you can secure with these two components.

Can I Use My EIN to Get A Business Loan?

Many small business owners wonder if they can get a loan with their EIN number alone, and the answer is yes. An EIN is one of the primary requirements you must fulfill when applying for a business loan, acting as your business’s unique identifier.

Although most lenders only offer credit to ventures with a good business credit score, some have loan products for newly established businesses.

These providers only require you to provide an EIN, which you can obtain from the IRS. But before you can get an EIN, you must establish a separate legal entity for your business, like a limited liability company (LLC).

The Importance of Establishing An LLC

The IRS primarily uses EINs to identify business entities from one another, meaning you’ll need to establish an entity before you can apply for an EIN.

But why LLCs, specifically? LLCs are known for their liability protections, shielding their owners from any liability they may incur. This feature reduces your risk of losing assets if your business fails to pay its business loans.

If your LLC defaults on its debts, creditors will go after its assets for repayment—not yours.

LLCs can also help you establish credibility in the eyes of the lender. Forming an LLC demonstrates your dedication to formalizing your operations, significantly increasing your chances of getting approved for a business loan.

Five Business Loans You Can Get With An EIN

There are different loan products you can get with your EIN, such as:

SBA Loans

The Small Business Administration (SBA) offers loans to businesses with an EIN. These business loans have favorable terms, such as low interest rates and long repayment periods, which make them ideal for newly established ventures.

Term Loans

Term loans are some of the most common types of business loans you can apply for. These financial products allow you to borrow a lump sum and repay it with interest over a fixed period.

Invoice Financing

Invoice financing is when lenders offer you a business loan based on your outstanding invoices. Once you pay those invoices, your debt will also be paid. It’s an excellent solution for when you need cash quickly.

Business Credit Lines

Business credit lines are highly flexible because they allow you to draw from a set amount of funds as needed. More importantly, they only charge you interest on your used amount.

Microloans

Some nonprofits offer microloans worth up to $50,000. These lenders aim to support and uplift small business owners in their local community by offering more lenient credit requirements than other institutions.

How to Get A Business Loan With An LLC & An EIN

Now that we know the various business loans you can apply for let’s discuss how to get them using your LLC and its EIN.

Form your LLC.

Each state has its procedures for establishing an LLC. However, the process typically involves designating a registered agent, filing articles of organization with the Secretary of State, and paying the associated filing fee. Currently, LLC formation fees range from $35 to $500.

Obtain your Employer Identification Number (EIN).

Once your LLC has been registered, you can get your EIN from the IRS.

Go to their website and look for Form SS-4. This is the application you’ll use for your EIN. After you complete it, you can submit it online or by mail. EINS are free, so be wary of any site that charges you a fee.

How long does it take to get an EIN? If you apply online, you can receive your nine-digit code immediately. However, if you submit your application by mail, you may wait up to four weeks to receive your EIN.

Identify which business loan you want to apply for.

Lastly, you must identify which loan you want to apply for. When it comes to choosing a business loan, there are five factors you must consider:

• Loan Term: How long is the loan term? Longer terms typically mean low monthly payments and high interest rates. In contrast, shorter terms mean higher monthly repayments and lower interest rates.
• Interest Rates: Different lenders have different interest rates, so don’t be afraid to compare. A low interest rate will help you save more over time, but be sure to check if it’s fixed or not. There are providers with variable rates, which can increase.
• Loan Size: How much funding will your business need? You want to determine how much money you’ll need so that you can narrow down your options.
• Flexibility: Does the loan have flexible repayment terms? Since unforeseen circumstances can happen anytime, you want to find a lender willing to suspend your repayments during a crisis.
• Collateral: Does the loan require collateral? Collateral is any asset, such as equipment or inventory, that will be used to secure the loan.

Considering these factors, you’ll have a harder time determining which loans fit your needs and goals.

Unlock the Potential of Your Business Today

Securing a business loan with an EIN and an LLC is relatively straightforward. But if you want to expand your funding options, we encourage you to form your LLC today with Inc. Authority’s help!

Inc. Authority offers free LLC formation services to small business owners nationwide. Our team of business formation experts will help you form your LLC and get your EIN free of charge.

If you form your LLC now, you can build your business credit and access better business loans in the future.

To learn more, visit our website here.