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How to Get a Small Business Loan in South Dakota
February 22, 2022
How to Get a Small Business Loan in South Dakota

How to Get a Small Business Loan in South Dakota

According to the U.S. Small Business Administration (SBA), South Dakota was home to 89, 942 small businesses in 2021, employing 210, 301 people or 58.5% of the total workforce in the state. Many small businesses in South Dakota are in industries such as professional, scientific, and technical services, retail trade, construction, and  real estate.

If you currently own a small business in the Mount Rushmore State or have plans to pursue entrepreneurship eventually, you may want to educate yourself on small business loans in South Dakota. Here’s what you need to know to select the best business financing options for your unique needs.

How to Spend South Dakota Business Loans 

No matter your industry, it’s likely that your South Dakota business has or will incur a wide array of expenses. If you don’t have the cash to cover all of them upfront, small business loans in South Dakota may come in handy.

You might use the funds to cover startup expenses, like office space, equipment, incorporation fees, inventory, and marketing. If your business has been around for a while, they may help you expand your product offerings or open new locations.

Since South Dakota business loans are flexible, you can use them for virtually any business expense. They may be just what you need to get your venture up and running or take your operation to new heights.

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Types of Small Business Loans in South Dakota

Once you perform research, you’ll find there is no shortage of South Dakota small business loans.

While some lenders offer fast funding, they’ll cost you more in the long run. The options that are more affordable, however, may come with more rigorous requirements and a lengthy application process. Here’s a brief overview of the most common small business loans in South Dakota.

Term Loans

Term loans are traditional bank loans. You’ll receive a lump sum of money at once and pay back your working capital loan over time, usually via fixed monthly payments. Even though you may land a competitive interest rate and attractive terms, you’ll need a good credit history to get approved. It might also take some time to receive your funds.

SBA Loans

Backed by the U.S. Small Business Administration (SBA), SBA loans are offered through SBA-approved lenders, which may be banks, credit unions, and online lenders. The SBA 7 (a) loan is the most popular option and offers up to $5 million in funding. Regardless of which SBA loan you choose, you may benefit from a low rate and lengthy repayment term of up to 10 years (25 years for commercial real estate).

Business Credit Cards

Business credit cards are similar to personal credit cards. You can use them to pay for any expense, up to a set credit limit. Many business credit cards offer benefits like 0% introductory APR offers, cash back, gift cards, discounts, and travel points. Before you move forward with a business credit card, make sure the annual fee (if there is one) is worth it.

Equipment Financing

If you need to buy or lease any type of equipment, like computers, ovens, or phone systems, equipment loans can be a smart choice. In most cases, the terms you receive will be based on the anticipated lifespan of the equipment you plan to purchase. Once you repay your loan amount, you’ll own the equipment outright.

Microloans

Microloans may be worth exploring if you need a small, short-term loan of up to $50,000. Most microloan lenders are mission-based nonprofits who lend to women, minorities, or underserved entrepreneurs. Oftentimes, they’ll also provide mentorship, training, and other resources in addition to financing. The SBA also has a microloan program for small businesses and qualified not-for-profit childcare centers with plans to start up or expand.

Invoice Factoring 

Also known as accounts receivable financing, invoice factoring allows you to sell your unpaid invoices to a factoring company for immediate cash. The factoring company will deduct a fee from your proceeds and likely advance anywhere between 80% and 95% of your invoices. Invoice factoring is easy to get approved for and may be worthwhile if you don’t meet the requirements of other loans.

Resources for South Dakota Business Owners

If you own a small business in South Dakota, it’s a good idea to consider these resources.

  • South Dakota Business Help: This website is full of information to help you start or grow your South Dakota business. There’s a business planning guide, financing section, and advice for Native American business owners.
  • South Dakota SCORE: South Dakota SCORE is a program by the SBA and offers free mentorship opportunities and low-cost workshops to business owners. You can look through mentor profiles to find the right one for your needs.
  • SD CEO West Women’s Business Center: This organization strives to empower entrepreneurs and small businesses to succeed personally and professionally. It offers in-person and virtual workshops, networking events, free advising, and more.

Achieve Your Business Goals with South Dakota Business Loans

Since South Dakota doesn’t charge corporate income tax or business inventory tax like other states, it’s the perfect place to pursue entrepreneurship. With South Dakota small business loans, you can turn your dream of becoming a successful business owner into a reality.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].