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