I did the first 2 steps: 1. Getting Certified through the Secretary of State and 2. Calling the IRS and getting an EIN (Employee Identification Number). After doing some research I thought getting a small business line of credit wouldn’t be hard but I’m kind of stuck here.
Even in a good economy, the two steps you outlined are not really prerequisites when getting a loan, more like the basics of complying with regulatory requirements for starting a business. You can apply for a loan even if your business does not have an EIN and will just use your SSN
What banks, and even SBA, looks at are:
- A business plan explaining what the business is
- Your personal credit history
- Financials of the business. If this is a new business, how realistic your financial projections are
- Your background and experience in the business — this is KEY in the eyes of the bank because they want to make sure that you know what you are doing and that you can make the business work. If you don’t have any experience with the business, have someone on board that knows the business to give banks assurance that someone will guide you
- Your credit factors because it shows your dependability and how well you handle credit. They will do a credit check on you and poor credit history may be frowned upon, or even reason for the disapproval of your loan application
- Your collateral. Banks, even SBA guaranteed loans, want the borrower to show collateral. They want to be guaranteed that somewhere somehow they can get payment from you
- Condition or terms of loans. Banks would want to know three important things: "How much money are you requesting? What will it be used for? and For how long will it be needed?" Banks oftentimes prefer to approve loans for items that can be identified, has lasting value, and can be repossessed and sold if things fail.
- Equity investment as they want to see that you are invested in your business as well
It’s really hard right now. You need to write up a professional and detailed business plan and have that ready for when you apply. It’s really hard to prove to banks that you have a good idea for a business in this economy.