What Is an EIN?

• An EIN is a nine-digit code that represents a business entity. As the name suggests, it is commonly used by people who employ other individuals or who simply need a separate tax ID for basic commercial activities. For instance, a bank may require an EIN in order to open a business checking account, or a supplier may ask for this number before shipping products on credit. Also, if a business owner plans to organize the company as a partnership or corporation, an EIN is required.
  
  

Can You Use It for a Loan?

• On a commercial loan application, the lender commonly asks for an EIN before proceeding with the evaluation process. However, even if the business owner lists an EIN, he usually must also list his own personal SSN somewhere on the application as the individual who is responsible for the company. The lender commonly runs a check on both the individual (responsible party) and the business before granting the loan.
  
  

What Else Is Required for a Loan?

• Besides an EIN, the lender also asks to see additional information specific to the company in order to grant a business loan. Lenders commonly require a complete business proposal that outlines basic company information, the marketing plan, projected financials and a full management profile. You may also have to provide collateral or proof that you have at least 25 percent of the amount of money you need to start up the company. A lender usually wants to see that you're personally invested in the company before granting loan funds.
  
  

Business Reporting

• When you apply for and secure a business loan with an EIN, the information is commonly reported to a business credit bureau (like Experian Business, Equifax Business or Dun & Bradstreet). The lender lists your payment history, the amount borrowed and basic details regarding the commercial loan. If a business owner defaults on the loan, that information is reported to business bureaus and could negatively affect the responsible party's personal credit history as well.