Even if you set up a limited company, the banks are still likely to look for a personal guarantee from you for any finance given to the company. Setting up a limited company will not change the underlying figures so I think it is unlikely that creating a limited company will make much difference to the banks in the current climate. We have a small retail business client who was recently successful in obtaining a loan from First Step. Have you looked into making an application with them? [broken link removed]
One of most important things which will help any applications for bank finance is to have a clear and strong business plan. Have you prepared one?
Lastly, setting up a limited company would have a number of implications and it is important to be aware of all the associated pro's and con's before you leap in. You might find this help sheet useful by way of general background:
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