South Dakota Development Corporation
The South Dakota Development Corporation was created for you and South Dakota. Bill Janklow, former governor, saw enormous potential for both small businesses and primary lenders in South Dakota through the Small Business Administration 504 program. He worked with the private sector to help form SDDC—recognizing the federal program was underused.
The SDDC took it from there and was certified under the Small Business Administration as a Certified Development Company in 1983. If eligible, your new or existing business may borrow anywhere from $50,000 to $5 million through the SDDC. With low interest, fixed-rate loans, the SBA 504 program can help you reach your business goals.
In 1998, the MicroLOAN was added to the mix of lending capabilities. This program provides loans up to $100,000 for fixed asset financing or working capital needs. SDDC is here for you!
SDDC 504 Loan Basics
Apply for low interest, fixed-rate small business loans for 10 or 20 year terms. And make yourself appealing to other lenders with less risk and lower loan amounts. Learn about SBA 504 loans and MicroLOANs with SDDC.
About SBA 504
SBA 504 Loan Quick Facts
- Provides permanent fixed-rate financing for fixed assets
- Available to for-profit businesses, including retail operations
- As a Certified Development Corporation (CDC), the South Dakota Development Corporation offers 504 loans statewide
- Loan amounts: maximum of $5 million; may increase to $5.5 million if project meets national objectives
- Subordinate lien position to bank
- Up to 20 year term, fully amortized
- Takeout financing
Current SBA Real 504 Rates
|10 Year||20 Year|
|September 2017||September 2017|
How the SBA 504 Loan Structure Works
Typically the SBA 504 loan has a 50-40-10 structure.
- 50 percent is financed by a regulated lender that receives a first mortgage position on all project collateral.
- 40 percent is provided by the South Dakota Development Corporation, which sells debentures guaranteed by SBA and receives a subordinated collateral position.
- 10 percent is provided by the borrower in a cash equity injection. This is the minimum equity contribution and depending on the project, and available personal resources, the SDDC may require a larger contribution.
Start-up businesses or single-purpose facilities require an additional equity contribution of 5 percent. If the business meets both of these criteria, a 20 percent equity contribution is required.
|SBA 504 Loan Structure Example:|
|Conventional loan; first mortgage||$325,000 (50%)|
|SBA 504 Loan 20 year term, fixed rate||$260,000 (40%)|
|Small Business concern, down payment||$65,000 (10%)|
|Total Project Cost||$650,000 (100%)|
About MicroLOAN Program
MicroLOAN Quick Facts
- Offers access to working capital for small enterprises; may also be used for fixed assets
- 3% fixed-rate interest
- 50% of total financing must be provided by a bank, credit union, or regional or local revolving loan fund
- Loan amounts: from $1,000 to $100,000; project size may not exceed $500,000
- May take a second collateral position behind a bank or credit union; takes a shared first collateral position if the lead lender is a regional or local revolving loan fund
- Up to a 10 year term, depending on loan size
- Takeout financing
How the MicroLOAN Structure Works
Typically, the MicroLOAN has up to a 50-50 structure.
- The MicroLOAN can participate up to 50% of the total project costs and the primary bank or credit union may not fund less than 50% of the total project costs.
- Total MicroLOAN proceeds outstanding at any one time, to a single borrower, may not exceed $100,000. Total project costs may not exceed $500,000.
- The equity injection requirement may be determined by the primary bank or credit union. The loan committee may require and equity injection when the MicroLOAN portion of a project exceeds $20,000.
An administrative fee will be assessed in the amount of $50.00 or one and one half percent of the loan amount, whichever is greater. This fee will be paid by the applicant. The applicant will also pay for any filing fees for security instruments, title insurance, appraisals, and surveys required. The applicant will also pay any other costs associated with closing of the loan.
What South Dakota Business Owners Have to Say:
The ease of the SBA 504 allowed me to purchase the grocery store in Highmore. While I worked on the transition of ownership, my SDDC loan officer handled all the necessary paperwork for this loan. I literally could not have done it without her. She continues to offer excellent service.
The SBA 504 allowed us to expand our car dealership and the long-term financing was key to our ability to expand. The partnership between the SDDC and our banker made the application process seamless.
The low rate and long-term financing availability of the SBA 504 program gave us the opportunity to bring all of our manufacturing under one roof. The SDDC staff was with us every step of the way.
The SDDC MicroLOAN program allowed us to purchase inventory, as well as provide a little extra working capital. The three percent fixed rate MicroLOAN was very appealing.
Start Your Loan Application
Choose a small business lending partner who’s here for you. Our loan application process is convenient and straightforward—with requirements outlined for you. Begin making your business goals a reality. Apply for an SBA 504 loan or a MicroLOAN today!
- SBA 504 Application (PDF)
- SBA 504 Application (Word)
- Finance Program Information (PDF)
- MicroLOAN Policy and Application (PDF)
You may view and print the application as a PDF file using Adobe Reader. Please note that while you may type your information onto this application and then print it, once you leave the site the information will not be saved. If you do not currently have Adobe Reader, download Get Adobe Reader program for free.
Contact Us or Send Your Loan Application
Have questions or comments? Ready to send your application? Contact South Dakota Development Corporation by submitting the form or directly contacting us at 605-773-8373 today.