Figures from Chancery Investment Partners show that 2,718 businesses applied for the scheme in the last tax year, up from 2,336 in the previous year. The total raised through the scheme last year was more than 1bn.
Application numbers have grown every year since the financial crisis as companies have turned to equity funding as bank lending has become more difficult to come by.
Gary Robins, partner at Chancery Investment Partners, said: EIS is becoming ever more popular among credit-starved SMEs looking to fund the next stage in their growth.
The scheme was boosted in 2012 after the Government made it available to larger businesses and increased the annual fundraising limit to 5m.
Robbins added: The new, improved EIS has been a big hit with businesses that would have been too big to use it before. These are well-established, stable businesses that are ready to take their proposition to a bigger audience but who need funding to do that.
EIS has been vital for these businesses, because the banks have practically withdrawn from lending to them. The big banks have been focussing on reducing their lending and repairing their balance sheets instead.