Whether you need to acquire funds to scale your business or you’re running behind on your expenses, a business loan can help you free up cash to cover the costs.
When applying for a small business loan, lenders will ask you to meet certain criteria and provide several important business documents. It can seem like a daunting process amongst the challenges of running your business if you’re unprepared.
One of those important documents lenders ask to see is your Form SS-4 notice. This is not the Form SS-4 itself but a required document to prove your business has been issued an employer identification number (EIN) by the IRS.
We know that the process can be a little confusing, so we’ve put together everything you need to know about Form SS-4, how you can apply for an EIN and why your lenders will ask to see your Form SS-4 Notice.
What Is SS-4?
As a small business owner, you may be familiar with Form SS-4 but as a quick refresher—it’s how businesses apply for an employer identification number (EIN). Upon successful approval of the SS-4 form, the IRS will then issue you a 9-digit EIN or sometimes it’s referred to as a Business Tax ID Number.
What’s an EIN?
Employer identification numbers are what the IRS uses to identify your business. The 9-digit number is provided to all employers, corporations and in certain cases to sole proprietors for tax purposes.
You’ll need an EIN if you want to open a business bank account, pay your employees, need business financing or have to apply for a business license.
Why a Lender Will Request a Copy of SS-4?
When applying for a business loan, lenders will ask for a Form SS-4 notice, as opposed to requesting a copy of the EIN application itself. The IRS sends out the notice once they’ve given you an EIN.
Akin to social security numbers, EINs are private, unique 9-digit numbers. The same way that a social security number verifies the identity of a person living in the United States, an EIN identifies a business entity.
When applying for a personal loan, your lender could validate your SSN by checking your social security card. However, there’s no card for an EIN, so taking out a business loan will require the business’s SS-4 notice to be verified.
To ensure that your loan application goes smoothly, lenders may not allow you to use previous tax returns to verify your EIN. Tax returns often contain clerical errors, typos and incorrect information. This prolongs the process of reviewing and underwriting your business loan application, causing further delays for you to secure business financing.
If you’re a sole proprietor or LLC without any employees, the likelihood is that you don’t have an EIN, because you’re not required to for tax purposes. A lender won’t need to see an EIN or Form SS-4 notice from you because the loan will be in your name. The lender will instead use your SSN to complete your loan application.
How to Obtain Form SS-4?
Applying for an EIN couldn’t be easier through the IRS website. You’ll need a few details about your business before you can submit Form SS-4, so it’s important to make sure you have them at hand.
Here’s what you need to provide:
- Your company’s name and full address
- The name of the applicant and their SSN, or ITIN
- The reason you’re applying for an EIN
- The type of entity your business is. For example, sole proprietor, partnership, corporation or non-profit
- The date you first conducted business
- The sector your business operates in
- Your principal business activity and the type of products and services your company sells
As a business owner, it can be difficult to find the time to submit the relevant documents, so it’s important to note that the IRS will allow any responsible party to submit Form SS-4 on your company’s behalf. Responsible parties include individuals or entities that control, manage or direct your business and its funds and assets.
Without Form SS-4 notice, your application for a small business loan could be delayed or declined, so it’s important to anticipate how long it will take for your Form SS-4 notice to arrive. The IRS recommends that business owners should apply for their EIN at least 4-5 weeks before they plan on applying for credit in case there are any discrepancies in their EIN application.
What If I’ve Lost My Form SS-4 Notice?
Lenders will often ask to see multiple business documents when trying to approve your loan in an efficient and timely manner. If your business has been operating for a number of years, it can be difficult to keep track of all of your documents.
Unfortunately, you won’t be able to gain another physical copy of your Form SS-4 notice but if you’ve checked every nook and cranny and come up short, don’t worry. If you applied for your EIN through the IRS website, you should have received your Form SS-4 notice as a PDF.
Failing that, you still have a few options to secure your Form SS-4 and be well on your way to getting a business loan.
Here’s what to do:
- If your business has an accountant, they’re likely to have completed the Form SS-4 for you and should have a copy of the notice before completing your tax return. Ask them if they can provide you with a copy.
- To open a business bank account, you’re required to provide a copy of your Form SS-4 notice. Get in touch with your bank to see if they’re able to provide you with a copy from their records.
- If you’ve tried the two methods above to no avail you can contact the IRS Business & Specialty Tax Line to request a copy of the EIN assignment letter. It’s important to note that only an authorized person within your business is able to request a copy of the EIN assignment letter.
Get Prepared Before Applying for Business Finance
Before starting the application process, it’s crucial that you collate your business documents, having them prepped and ready for your lender to review. Struggling to find the relevant documents or requesting copies once the application process has begun will hinder the lender from approving and paying out your business loan.
If you’re unable to find your SS-4 notice, take a little time out of your day to look for it. Remember not to panic if you can’t find it. You can contact the IRS directly to request a copy of your EIN assignment letter.