Do you know that the easiest way to apply for an EIN is by filling out the IRS Form SS4 online, and you could find it on the IRS website? Filing it should be a straight forward job as the form is only one page long. Expect to provide information like:
- Business’s legal name and address
- Name of applicant and their SSN, ITIN, or EIN
- Type of entity
- Reason for applying for an EIN
- Date your business started
- The highest number of expected employees in the next year
- Principal business activity
- The principal type of products or services sold or rendered
Moreso, you should note that business owners themselves don’t need to apply for their business’s EIN, it can be delegated to any responsible party. IRS defines this as the individual or entity that “controls, manages, or directs the applicant entity and the disposition of its funds and assets.”
Point to Note
You must have it at the back of your mind that, if you’re a sole proprietor or an LLC with no employees, you might not have gotten an EIN at all. This is because these are the only two types of business entities that aren’t required to get an EIN for tax purposes. The loan will be in your name, and your lender will use your social security number in lieu of an EIN.
Lender Will Request for a Copy of Your IRS Form SS-4
Whenever you are applying for a small business loan, your lender might ask you for your Form SS-4. However, they’re not actually asking for a copy of your EIN application itself. Rather, they’re really asking for the notice the IRS sends out once they’ve assigned your EIN. This is because IRS Form SS-4 is referenced on this notice, the notice itself is often referred to as Form SS-4.
But why do your lenders need your SS-4 notice at all? Like social security numbers, EINs are private. In fact, you can think of your EIN as your business’s social security number.
Just like when you are applying for a personal loan, your lender could verify your SSN just by inspecting your social security card. However, verifying an EIN is a little trickier because cards aren’t issued for EINs like they are for SSN, but lenders still need to be able to verify them and that’s the reason why they will request a business’s SS-4 notice which you get after filing the IRS Form SS-4.
Some questions may be asked, such as can’t my lender just use my tax return to verify my EIN to lend me a loan? Unfortunately, the answer is no. This is due to the fact that the IRS uses the EIN reported on your tax return to match your return to your business but clerical errors and typos do happen.
Sometimes it’s possible that your tax preparer entered your EIN incorrectly, and the IRS hasn’t notified you of the error yet. This is actually a pretty common error with returns filed on paper rather than electronically. And it can take the IRS months, sometimes even longer to identify the error and notify you of it.
Your lender knows that those little errors can occur, so they want to get straight to the source of the information, the SS-4 itself.
However, most business owners want to be approved quickly, too! So the lender needs to be sure they’re using the correct EIN when they’re reviewing your loan application and underwriting your business loan. They can’t risk a clerical error resulting in a delayed underwriting process, let alone an unwise lending decision.
