A business credit card can be a financial tool for your firm. Typically, issuers require a personal guarantee from business owners, which means providing your Social Security number on your application.
But there are exceptions: You may be able to get a business credit card with only an Employer Identification Number. You could also limit your card options.
[Read: Best Business Credit Cards.]
What Is an EIN?
An EIN is a unique nine-digit number assigned by the IRS to identify your business for tax purposes. You also use your EIN when you open a business bank account or establish a vendor line of credit. You can apply online for one for free through the IRS.
According to IRS rules, you need an EIN if:
-- You have employees.
-- Your business operates as a corporation or partnership.
-- You file employment, excise or alcohol, tobacco and firearms tax returns.
-- Your business withholds taxes on income, other than wages, paid to nonresident aliens.
-- You have set up a tax-deferred Keogh (KEY-oh) retirement plan.
-- Your business involves a trust; an estate; a real estate mortgage investment conduit, or REMIC; a nonprofit; or a farmers cooperative.
Can You Apply for a Business Credit Card With Just an EIN?
Probably not. Credit card issuers need to verify your ability to repay. If your business isn't large and well-established enough to qualify for a corporate credit card using business credit, you will most likely need to use your Social Security number.
Most credit card issuers won't approve you for a business credit card unless you sign a personal guarantee. When you make a personal guarantee, you promise to pay for business debts using personal assets such as cash, real estate or investments.
A personal guarantee holds you liable if your business defaults on a debt. Issuers will need your Social Security number to check your personal credit report and credit score and judge your creditworthiness.
Your options are slim if you're only looking at cards that don't require your Social Security number. Generally, the cards you'll be able to get using just an EIN are store cards, cards from small banks, or corporate cards.
Still, some issuers waive personal guarantees for businesses with enough revenue and time in business. That's usually in the neighborhood of at least $1 million in revenue annually.
"No reputable institution will give you credit solely with an EIN, no credit history and a zero balance in your business banking account," says Brian Cairns, founder of business consulting firm ProStrategix Consulting.
[Read: Best Rewards Credit Cards.]
Why Should You Get a Business Credit Card Using Only an EIN?
Applying for a business credit card with just an EIN could make sense for a few reasons.
"One pro is that you prevent the card issuer from making an approval decision based on your personal finances," says Shannon Vissers, a writer/editor focused on business credit cards at Merchant Maverick, a website that reviews products for small businesses.
This could help if you have poor or minimal personal credit history.
Avoiding a personal credit check would also allow you to sidestep a new credit inquiry showing up on your credit report. Inquiries account for only a small percentage of your personal credit score, but each new one can knock off a few points.
Getting a business credit card with only an EIN may be important if you prefer not to sign a personal guarantee. If you can't keep up with the minimum payments, the credit card company wouldn't be able to sue you personally for the debt.
Keeping business and personal finances from being commingled can be a smart move. "Generally, it's good to separate your business and personal finances as much as possible, as to reduce your personal liability for business debts and to clearly delineate finances for tax purposes," Vissers says.
Which Business Credit Cards Can You Get With an EIN?
Options for EIN-only credit cards exist, but the field is narrow. Your best bet may be a corporate card, if you can qualify for one.
Corporate credit cards are designed for larger businesses: generally ones with at least $4 million in revenue. If you have a smaller business, you probably won't be eligible for a corporate credit card.
With this kind of card, liability for balances is tied to the business itself, not business owners. These cards are ideal for principals who prefer to get a credit card with only an EIN or who need more purchasing power than standard business credit cards allow and may want to issue cards to employees.
You could also earn valuable rewards with a corporate card, though some may charge high annual fees.
Some store cards or cards from small banks may allow you to apply for a business credit card with only an EIN.
[Read: Best Secured Credit Cards.]
What Are Other Options if You Can't Get a Business Credit Card With an EIN?
If you're not satisfied with your EIN-only business credit card options, you can find other ways to get credit for your business. For example, you could:
-- Take out a business loan that doesn't require a personal guarantee.
-- Look into short-term business financing, such as invoice factoring or a merchant cash advance.
If you're reluctant to share your Social Security number because you have poor or limited credit, consider that even some credit could be better than no credit.
And think about what you can do to improve your credit in the meantime. Paying your bills on time and slashing your card balances are two of the most significant ways to positively affect your credit score.
Once you get a new credit card for your business, continue practicing good financial habits.
"Regardless of how you get your card, it is more important to manage how you use it," Cairns says.
Keep track of business purchases, and consider the interest charges you might pay if you carry a balance. Monitor your cash flow to ensure that you're not overextending yourself or your business with a credit card.
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