Local Loan Funds

GENERAL INFORMATION ON THE LOCAL LOAN FUNDS
Western South Dakota entrepreneurs today enjoy a positive climate for obtaining capital, thanks to five loan programs administered by the West River Business Service Center for Black Hills Community Economic Development, Inc. and The West River Economic Development Coalition. Loans are offered for business start-ups or expansions at competitive rates.

In addition to the loan program the West River Business Service Center offers free expertise for developing business plans, tapping into market research, and creating marketing strategies. Staff at the Black Hills Community Economic Development, Inc in Sturgis (phone 605-347-5837) and at the Pierre Area Business Service Center (phone 605-945-1661) can provide the same expertise or direct clients to it.

As described below, rules governing these five programs vary. The West River Business Service Center staff can help business people decide which program is best suited to their needs.

LAWRENCE COUNTY REVOLVING LOAN FUND
Established in 1998, the fund makes loans up to $150,000 available to for-profit businesses in Lawrence County. Projects must lead to the creation, retention, or expansion of businesses and jobs. Money can be used for acquiring land and buildings, machinery and equipment, construction, working capital, and contingencies. The Loan fund cannot be used to refinance existing loans.

Bank participation is typically required, and applicants have to secure other financing and must provide a minimum of 10 percent of the project cost. The Lawrence County Revolving Loan Fund can provide up to one third of the project cost, and a monthly principal and repayment schedule will be set up.

Loans for buildings and land are limited to 15 years, while equipment loan terms will not exceed the life of the equipment. Working capital loans will not exceed five years.

Lawrence County Revolving Loan Fund Application (PDF)
You will need the Adobe® Acrobat® Reader to view, navigate and print the loan application PDF files.

Or download the application as a Word document.

WEST RIVER REVOLVING LOAN FUND

Also initiated in 1998, this fund makes available up to $150,000 for a wide range of uses: feasibility studies, business start-up costs, purchase or development of land, infrastructure, equipment purchase, and community facilities and housing that can demonstrate repayment capability.

Loans are available in all western South Dakota counties, through the U.S. Department of Agriculture's Rural Development funding. Applicants must show at least 10 percent owner equity. Collateral to secure the loan will be required in the form of land, buildings, equipment, or other assets. The repayment period is generally no longer than 10 years. Loans may cover up to 50 percent of project costs.

West River Revolving Loan Application (PDF)
You will need the Adobe® Acrobat® Reader to view, navigate and print the loan application PDF files.

Or download the application as a Word document.

SMALL BUSINESS ADMINISTRATION 504 LOANS

This long established program has had a great impact on South Dakota business development over the years. Funds are available for fixed assets such as land, buildings, and equipment. No working capital, inventory, venture capital or refinancing loans are eligible. Borrowers must be for-profit businesses with a net worth less than $6 million, and whose after-tax profits the past two years have averaged less than $2 million. An operation not meeting those standards might still be considered a small business based on its number of employees, a number that varies depending on the type of business.

Administered by the Black Hills Community Economic Development, Inc., the program works with banks and businesses on what's known as a 50-40-10 structure. That means a regulated lender typically provides fifty percent of the financing and receives a first mortgage position on all project collateral. Forty percent is provided by the Black Hills Community Economic Development, Inc which sells debentures guaranteed by SBA and receives a subordinated collateral position. The remaining ten percent is provided by the borrower in a cash equity injection. Black Hills Community Economic Development's portion may range from a minimum of $50,000 to a maximum of $1.3 million. Finance rates are fixed for the repayment period, usually 10-20 years.

Small Business Administration 504 Loan Application
Download from http://www.bhced.org/loans
You will need the Adobe® Acrobat® Reader to view, navigate and print the loan application PDF files.

PENNINGTON COUNTY ECONOMIC DEVELOPMENT FUND

The purpose of the Pennington County Economic Development Fund is to promote Economic Development within Pennington County by providing financing that provides and economic incentive to business for creating new primary jobs by expanding or relocating to Pennington County, thereby creating a better quality of life and increasing the tax base of Pennington County.

Program Guidelines

• A minimum of 10% equity contribution must be provided by the applicant.
• Participation of a private lender is required
• The interest rate and terms shall be set by the Pennington County Economic Development Fund Management Board.
• Loan terms for machinery and equipment shall not exceed the expected life of the asset.
• Loan terms for real estate shall have a maximum amortization period of 20 years, with a balloon payment due in 5 years
• Fixed assets, equipment, leasehold improvements, construction and/or renovation improvements are eligible collateral.