Small business owners from Sioux Falls to Pierre to Rapid City are the lifeblood of the state of South Dakota. They employ more than half of the state’s employees, so tens of thousands of people and their families rely on small businesses!
But entrepreneurship isn’t easy. One of the top reasons small businesses fail is that they often do not have enough money to survive, especially during turbulent economic markets. Fortunately, there’s a solution: small business loans.
How a Small Business Loan Can Help Your South Dakota Business
Business owners can use small business loans for a variety of purposes, from working capital to buying real estate.
If your business is struggling to pay bills during a slow period, a loan can get you through. If you have an opportunity to buy a competing business, small business financing can provide the capital you need to take even more market share.
You can use a loan to hire employees, invest in marketing, buy equipment, or purchase property.
Types of Small Business Loans to Choose From
Let’s look at some of your business loan options, then we’ll explore the lenders who can help.
Though they have the toughest criteria to qualify for, bank loans come with the sweetest benefits in the form of low interest rates. If you have great credit, this is a good place to start.
Loans backed by the U.S. Small Business Administration also offers low interest rates and long repayment periods. There are several SBA loan programs, including the 7(a), 504, and microloan program. Learn more at SBA.gov.
Commercial Real Estate Loans
Commercial real estate loans are available if you’re looking to buy land or a building for your business. The property you’re purchasing acts as collateral for the loan, which may help you secure a lower rate.
If you don’t qualify for an SBA or bank loan and you send your clients invoices, you might explore invoice financing, which lets you get an advance on unpaid invoices. Typically you don’t need to have high credit scores to qualify, and some invoice financing companies won’t even look at your credit. This is a great option for startups who don’t qualify for bank loans.
Small Business Loan Options for South Dakota
Small business loans come in all shapes and sizes, and you can find lenders at banks, credit unions, and online.
- GROW South Dakota
- Credibility Capital
Real Estate Loans
- Business Capital
What it Takes to Get Approved for a Small Business Loan
When it comes to getting approved for a loan, borrowers will have to meet certain criteria, depending on what the lender requires. For bank and SBA loans, you must have an existing business that has operated for two years or more. You may also need to have excellent personal and business credit for these options.
Other options, like those offered by online lenders or invoice financing, may have less strict requirements to qualify. So not to worry! No matter what your credit situation, there’s a loan for you!
How to Choose the Right Loan for Your South Dakota Small Business
So which of the business financing options we’ve discussed is right for you? It depends on your specific needs. Ideally, you’d get one with a low interest rate and long repayment period.
Consider also how much you need to borrow, as some lenders have minimums or maximums for how much you can borrow.
Small Business Grant Options for South Dakota
Entrepreneurs also have the option to apply for grants from nonprofits, local, state, and federal governments, and corporations. These grants don’t have to be repaid, and can provide capital you can use for your business.
Here are some grant options to explore:
Additional Resources for South Dakota Small Businesses
There are also numerous business resources in South Dakota that can provide technical assistance, mentoring, and networking opportunities.
- Small Business Development Center
- South Dakota Office of Economic Development
- South Dakota Business Help
Grow Your South Dakota Business
Now that you know more about your small business financing options, which will you choose for your South Dakota business? Finding the right loan for your needs is important, so spend time reviewing the options we’ve provided (as well as any others you find) and select the one that’s best for you!
This article was originally written on March 8, 2022 and updated on March 11, 2022.