SD Incentives | Finance, Loans, IRB, Workforce Development

A comprehensive list of South Dakota financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.


https://businessfacilities.com/2016/03/sd-incentives-and-workforce-development-guide/
A comprehensive list of South Dakota financial aid, loans, grants, abatements, workforce development, exemptions, funds & capital investment opportunities.
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South Dakota Incentives and Workforce Development Guide

SD Incentives | Finance, Loans, IRB, Workforce Development

For a list of South Dakota economic development agencies that can help with the site selection process, visit our Online Site Seekers’ Guide.

 

South Dakota is recognized by the Tax Foundation as having the nation’s second best business tax climate. Combine that with our low cost of doing business and you have the ideal location for your business expansion.

In South Dakota we believe that if you make a profit you should keep your profit. South Dakota has:

  • No corporate income tax
  • No personal income tax
  • No personal property tax
  • No business inventory tax
  • No inheritance/estate tax

South Dakota does have a low 4.5% state sales tax, low unemployment taxes and low real estate taxes. New qualified businesses are eligible for both sales tax refunds and property tax abatements.

South Dakota has a wide assortment of loan and incentive programs that can help your business grow. Listed below is a summary of our programs. For more Information contact the South Dakota Governor’s Office of Economic Development.

 

FINANCING / LOAN PROGRAMS

Revolving Economic Development & Initiative (REDI) Fund:

  • Provides permanent financing for land, buildings, machinery and equipment
  • 2% fixed interest rate
  • 10 to 20 year amortization, based on useful life of assets financed
  • Five year balloon payment
  • Take-out financing
  • Minimum 10% equity contribution; REDI Fund loan amount may not exceed 45% of total project costs
  • Job creation is a factor in determining loan amount – must meet program minimum wage and benefit requirements
  • Low origination fee

SBA 504:

  • Provides permanent fixed rate financing for fixed assets
  • Available to for-profit businesses, including retail operations
  • Take-out financing
  • 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

Economic Development Finance Authority (EDFA):

  • Designed for more capital-intensive projects; $1 million minimum
  • Provides small businesses access to the public bond market backed by the EDFA’s “AA” rating by Standard and Poors
  • Up to 20 year fixed-rate financing for fixed assets
  • Bonds may be tax-exempt on projects that are less than $20 million in total project costs
  • Ideal for ag processing or manufacturing projects
  • Take-out financing

South Dakota Microloan/Microloan Express:

  • Offers access to working capital for small enterprises; may also be used for fixed assets
  • Up to 10 year term
  • Maximum loan amount of $100,000; minimum $1,000; total project costs cannot exceed $500,000. Application fee, due at the time of funding, is the greater of 1.5 percent of loan amount or $50
  • 3% interest rate
  • 50% of total financing must be provided by a bank, credit union, or local regional revolving loan fund; balance from Micro LOAN and equity injection (if required by lender); Micro LOAN may subordinate to lender involved

South Dakota Works:

  • Provides equipment, working capital and interim construction financing
  • Eligible borrowers include: businesses seeking new financing and certified development financial institutions (CDFIs)
  • Must meet US Treasury guidelines
  • Term: 1-5 years
  • Fixed interest rate, typically 1% less than lead lender
  • Bank must provide no less than 20% of “at risk” financing toward eligible costs
  • May take second position on collateral behind the lead lender

 

TAX REFUNDS & OTHER INCENTIVES

Reinvestment Payment Program:

  • Assists companies in offsetting the upfront costs associated with expanding operations and/or upgrading equipment
  • Total project costs in excess of $20 million or equipment upgrades in excess of $2 million
  • One key criteria considered by the board when reviewing an application is the likelihood the project will occur without the Reinvestment Payment Program
  • Grant may not exceed state sales/use tax paid on eligible project costs

South Dakota Jobs Program:

  • Assists companies in offsetting the upfront costs associated with expanding operations and/or upgrading equipment
  • Total project costs less than $20 million or equipment upgrades less than $2 million
  • One key factor considered by the board when approving or denying an application is the likelihood the project will occur without the South Dakota Jobs grant
  • Grant may not exceed state sales/use tax paid on eligible project costs

New Frontiers:

  • Assists companies in offsetting R&D costs, such as clinical trial costs, associated with gaining regulatory approval of products
  • Companies can apply for reimbursement of sales tax associated with R&D and testing expenditures
  • R&D plan and projected expenditures must be submitted with the application

Proof of Concept Fund:

  • Provides up to $25,000 to conduct research demonstrating the technical and economic feasibility of an innovation
  • Eligible parties include: entrepreneurs, universities, existing South Dakota companies or other entities committed to commercializing the results in South Dakota
  • Requires a matching cash or in-kind investment of at least 10% of the total project cost
  • Investment proceeds may be used to pay consultant contracts, materials and supplies, salaries for employees in South Dakota, and necessary services for technical feasibility or marketing studies

Workforce Development Program:

  • Provides matching grants to assist companies with up to 50% of eligible training expenses
  • Funding is released on a reimbursement basis upon the completion of the training
  • Assists with new and current employee upgrade training
  • Jobs must meet minimum wage and benefit requirements
  • Training must focus on the technical aspects of the job

Dakota Seeds:

  • Designed to help employers establish a pipeline for future skilled employees
  • Internship must provide a meaningful work experience for the student that will help them further their career pathway
  • Internships are open to both high school and postsecondary students
  • Positions must have a link to science, technology (computer science), engineering, mathematics, accounting or manufacturing
  • The internships cannot be filled by family members of the business ownership group
  • Students must be paid a minimum wage of $10 per hour

 

 

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