If you are an immigrant business owner in the United States, it can be difficult to secure business financing, and it is a common misconception that you cannot secure funding without a social security number. While there are still some limitations for getting access to business financing, we now have ways that make it easier for an immigrant to get business funding. Here, we will take a look at how to secure business financing with an ITIN.
Using Your ITIN for Business Financing
If you do not have a social security number, one of the things you can use instead is an Individual Taxpayer Identification Number (ITIN). Your ITIN is a number used for tax processing, and it is issued to people who cannot get a social security number by the Internal Revenue Service (IRS), but have to file a tax return for their income. So, regardless of your immigration status, if you have to file federal taxes, you can get an ITIN.
You can then use your ITIN to apply for financing for your business. While larger financial institutions are unlikely to accept an ITIN in place of the social security number, many small banks, credit unions, and alternative lenders like Cultiva Financial can still help you secure funding.
How the ITIN Works
You can file for an ITIN by filling out a W-7 form, providing a complete federal tax return form, and attaching a photo ID. You can then mail it to the IRS, submit it online, or take it to your local IRS agent. It will take about six weeks for you to receive your ITIN number from the IRS.
While the purpose of the ITIN is to allow non-residents to file a federal tax return, the ITIN has been slowly transitioning over the years into the alternative to a social security number for those who are not able to obtain one. The ITIN does not change your residential status; it just allows you to file taxes and access credit and financing for yourself and your business.
Why Financing Applications Ask for Your Social Security Number
When you apply for financing, one of the reasons the applications will ask you for a social security number is because they want to verify your credit score and credit history to determine if you are likely to make your payments on time. With your credit history, they can see if you have too many late payments or not paying something entirely. They can also see if you have any existing debt and how much it is, which can play a big role in how much you are able to borrow. Therefore, having a good track record is important to get financial institutions to take a chance on you.
It also will help identify your business with the IRS. Often, they want to look at both your personal credit and your business credit history. Finally, they also want to get a personal guarantee from someone before giving them financing, which also helps reduce the lender’s risk. The personal guarantee in business credit is still the promise to repay the loan, but for businesses, it states that the business owner or an executive will be personally responsible for repaying the loan.
How to Apply for Business Financing Without a Social Security Number
If you have an ITIN, you can use it in place of the social security number, and if you do not have one yet, they are simple to get. After you have an ITIN, you can file for an Employer Identification Number (EIN) for free. This is another number issued to you by the IRS, and it is an identification number for your business. Creditors can use it to look at the credit history for your business specifically. Having an EIN can help you apply for financing for your business. You have to have a taxpayer identification number of some sort to apply, whether that is an ITIN or a social security number, so you will need to get your ITIN before you can get an EIN for your business.
The Best Financing Options for businesses with ITINs
There are still great options for businesses financing whose owners only have an ITIN. But, typically, you need to have something to leverage as collateral without a social security number — and often even with one.
At Cultiva Financial, we offer a variety of financing options that can help you access funding quickly and don’t require a social security number:
Equipment Leasing
We offer financing for business equipment leasing to help you stop paying high rates to rent equipment and help you start down the path to owning the equipment your business needs. Buying the equipment outright can be expensive, but so can renting; this business financing option to get you the equipment you need at an affordable rate.
Invoice Factoring
If you have slow-paying clients and you need cash within 48 hours, we offer invoice factoring services. We will buy your open invoices to get you fast cash to cover your critical business expenses.
Asset-Based Lending
Asset-based lending is for a business owner who needs a large amount of funding that has tried to get financing from other traditional options. With asset-based lending, you need to have collateral to leverage, which can be property or investments.
Materials Purchasing
If you need materials for a job now but you do not have the money upfront to purchase them, we have a business financing option for materials purchasing. This funding is ideal if you need a large quantity of materials, are waiting for payment from clients, and need the materials now.
Can You Build Credit History with an ITIN?
At first, your access to financing with your ITIN may be somewhat limited, but as you build up a credit history, you will have access to more funds, including financing for your business. It can take some time to build up your credit history, so you may not be able to access much funding in the beginning, especially from bigger lenders, but over time you will be able to.
Credit standing is determined based on the three major credit bureaus, and when you use your ITIN to gain credit, the information is given to them to help you get a credit score. It usually takes between three and six months for you to get a credit score since you need to have a little bit of credit history behind you before you begin to generate a credit report. This is your personal credit.
Building business credit is similar to building personal credit, but it is focused entirely on credit transactions within your business, not your personal accounts. This includes working with vendors and paying them on time, using business credit cards, and paying other credit-related items that are linked solely to your business. This is where your EIN comes into play; by looking it up, a financial institution can see everything linked to your business without having to separate business credit from personal credit.
Cultiva Financial Does Not Require a Social Security Number
At Cultiva Financial, we do not require a social security number for many of our services when applying for financing; you can use your ITIN instead. We offer financing for materials purchasing, equipment leasing, asset-based loans, and invoice factoring. All that you need in order to apply is your ITIN, a driver’s license or government-issued ID, and between three and six months of bank statements. If you have a strong business history or credit history, it is easy to secure the funds you need to help your business flourish at Cultiva Financial.
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