Why do lenders require a Social Security Number to issue you a credit card and why would a business owner want to get a business credit card with only an EIN number? What are the benefits of doing so and what are the options available? In this article, we’ll cover some of the intricacies behind applying for business credit cards to help you understand the best option for your business.
Can you get a business credit card with just an EIN number?
Yes, but the options are limited. Most small business credit cards will need you to submit your Social Security number in addition to your company’s EIN in order to check your personal credit history. This is because the card issuer will usually require a personal guarantee. If the business fails, the person who applied for the credit card will be legally liable for the balance.
There are a few options for small businesses or new businesses that want to obtain a credit card using just an EIN number, but these are typically for businesses that have an established credit history and proven track record of profit.
What is an EIN?
The Employer Identification Number (EIN) is a unique 9-digit number assigned by the IRS to identify businesses operating in the U.S. for tax purposes. Small businesses will need an EIN to apply for a business license, open a business bank account, and file tax returns.
Why apply with your EIN instead of your SSN?
There are a few reasons why you may want to apply for an EIN-only business credit card:
- Avoiding personal liability. EIN-only credit cards allow your business to be responsible for the balance on the card, instead of holding you personally responsible. This is advantageous if you don’t want to be held personally liable should the business go under.
- Avoiding personal credit impact. Your business credit score could show up on your personal credit history. If your business has trouble making payments to the lender, that may impact your personal credit. Many people would prefer to keep the two separate.
- Poor credit or no credit history. People who don’t have good credit or who have little credit history may also benefit from just applying with the EIN, as it may be difficult to secure a credit card with your SSN.
- No Social Security number. If you don’t have a SSN, there may be limited options to securing credit. However, you can still secure an EIN without an SSN (e.g., you are a foreign national with an Individual Taxpayer Identification Number or ITIN).
What credit cards can you apply for with your EIN only?
- Corporate credit cards: A limited number of corporate credit cards may not require the business owner to provide a Social Security Number to check personal credit history, though they will usually require your company to have an established credit history and track record of profit—although this might mean demonstrating revenue in the millions. For these cards, only the company would be liable for the balance of the credit card. If your company is registered as a C-corp, S-corp, LLC, or LLP, you may be eligible to apply.
- Corporate store credit cards: These cards are used for purchasing items at a certain store like Office Depot/OfficeMax or Sam’s Club and may offer perks such as discounts and rewards points. Corporate store credit cards usually do not require you to personally guarantee the debt.
- Corporate gas cards: A fleet card, or corporate gas card, can be used toward purchases of fuel for business purposes. You can issue multiple cards for employees and set the fuel limit. These cards usually do not require a personal guarantee. A popular example is the Shell Small Business Credit Card.
- Prepaid business credit cards: These cards are low risk for card issuers since they require the owner to load money onto the card before spending it. You wouldn’t be building your business credit with a prepaid business credit card, but they won’t require you to submit your Social Security number.
- Secured credit cards: A secured credit card requires a cash deposit equal to the credit limit. If you want a credit card with a $1,000 limit, you’ll have to deposit $1,000. This requirement makes the credit card low risk for the card issuer since the money can be recovered from the deposit if you don’t make the payments. You’ll still be able to build your credit with a secured credit card.
Business owners who want to keep their business and personal credit separate want the option of applying for a business credit card with only an EIN. Obtaining a credit card this way ensures that the business owner will not be ultimately responsible for the business credit card’s unpaid balance and their own credit history will not be impacted by the business credit. Although the options are limited, there are business credit cards on the market that can be approved with only an EIN including corporate cards, store credit cards, gas cards, prepaid business credit cards, and secured credit cards.