Foreign investors often read that they need an ITIN before they can borrow in the US. For a loan made to a US LLC, they do not. The confusion comes from consumer lending, where some programs for non-residents use an ITIN in place of a Social Security number to identify the individual borrower. In business-purpose lending the borrower is the company, and the company has its own number.
ITIN, EIN and SSN compared
| Number | Identifies | Needed for your loan? |
|---|---|---|
| EIN (Employer Identification Number) | The US LLC | Yes. The lender, the title company and the bank all ask for it |
| ITIN (Individual Taxpayer Identification Number) | An individual with a federal tax purpose who is not eligible for an SSN | No |
| SSN (Social Security number) | A US citizen or authorized worker | No |
What the IRS says an ITIN is
According to the IRS, an ITIN is a 9-digit number issued when you need a US taxpayer identification number for federal tax purposes but are not eligible for a Social Security number. It is issued for federal tax purposes only. It does not provide immigration status, does not authorize work in the US, and does not serve as identification outside the federal tax system. You apply with Form W-7, included with the federal tax return it is needed for.
In other words, an ITIN exists so that you can file or be named on a US tax return. It is not an identity document for a lender.
The EIN is what the loan needs
Your LLC gets its EIN from the IRS with Form SS-4. The IRS instructions say to enter 'foreign' or N/A for the responsible party who does not have and is ineligible to obtain an SSN or ITIN, and international applicants with no US office can apply by phone. The EIN without an SSN entry walks through the form line by line.
With the EIN issued, the LLC opens its US bank account, and the loan can close. See setting up a US LLC for the full sequence.
When you may need an ITIN later
Because the W-7 is generally filed with the return itself, the ITIN usually comes at the first filing, not at purchase. Your US tax adviser will tell you when to apply.
- To file a personal US federal return reporting rental income or a gain on sale that flows to you from the LLC
- To claim a credit or refund of FIRPTA tax withheld when the property is sold; see FIRPTA for a foreign-owned LLC
- When a tax treaty position or another US filing requires an individual number
What the lender does ask you for
Instead of an ITIN or a US credit score, a business-purpose lender asks for your passport and proof of address for KYC, proof of the source of the equity, the LLC's documents and EIN, and the property file. Passy Capital then lends on the same terms as to a US investor: bridge up to 80% LTV, fix and flip and renovation up to 90% LTC, construction up to 85% LTC and DSCR up to 80% LTV, from $1M to $5M.
Common mix-ups
- Applying for an ITIN before the purchase "to be ready": the W-7 is generally filed with a tax return, so there is usually nothing to attach it to yet
- Using a personal ITIN where the LLC's EIN is required: the lender, title company and bank want the company's number
- Assuming an ITIN builds a US credit file that helps the loan: business-purpose lenders do not need one