South Dakota small business grants, loans and training funds (2026)

Loans, conditional awards and reimbursements: sorting South Dakota’s programs

• Repayable loans. SD Works (the state’s SSBCI program) and the REDI Fund, both through GOED and the Board of Economic Development ⁠¹⁠⁴.
• Conditional innovation awards. Proof of Concept, SBIR Phase 0 and SBIR Supplement. If the project fails, you keep the money. If it succeeds, the award becomes a 0% promissory note ⁠⁸.
• Training reimbursements. GOED’s Workforce Development Program and the Department of Labor and Regulation (DLR) training and apprenticeship funds. You pay first ⁠⁶⁠⁹⁠¹⁰⁠¹¹.
• Export reimbursement. SD STEP, run by South Dakota Trade ⁠¹².
• Large-project incentives. The Reinvestment Payment Program is for new or expanded facilities costing more than $20,000,000 or equipment upgrades over $2,000,000. The South Dakota Jobs Program covers smaller construction projects, and retail, housing, lodging and health care buildings cannot get reinvestment payments ⁠¹⁴. Neither fits a typical startup.

SD Works: South Dakota’s whole $60 million SSBCI share in one loan

Treasury allocated South Dakota $60,010,454 under the State Small Business Credit Initiative in an agreement dated July 26, 2022 ⁠³. All of it goes to one loan participation program, SD Works, which GOED both implements and administers. There is no SSBCI equity fund, loan guarantee or collateral support program in the state ⁠².

SD Works is gap financing. Your bank makes the main loan, and GOED makes a second, companion loan that can sit behind the bank’s lien ⁠¹. Treasury’s summary says the state’s share can match the bank 1:1 or reach 50% of the total financing. GOED aims for about 20% participation and an average companion loan of $250,000. There is no minimum, and no companion loan may exceed $5 million ⁠².

With a 5-year balloon, the remaining balance comes due in year five even on a 20-year schedule ⁠¹.

By December 31, 2025, Treasury had disbursed $39,313,136, and the state had deployed $21,902,366, or 36.5% of its allocation ⁠³.

Applying to the REDI Fund and the Board of Economic Development

The REDI Fund is what GOED calls its flagship financing tool. It lends to start-ups, to businesses expanding or relocating in South Dakota, and to local economic development corporations. Loans carry a 3% base rate, require at least 10% equity, and take a shared first lien on the financed assets. They pay for land, site improvements, buildings and machinery, not working capital ⁠⁴. For working capital, use SD Works.

REDI and SD Works share one 2026 application. It requires commitment letters from every lender, a sources-and-uses table backed by bids or quotes, a business plan, three years of past financial statements, three years of projections, five years of projected South Dakota jobs, and personal financial statements and tax returns for each owner of 10% or more. GOED points applicants to the SBDC for help with projections ⁠⁵. The board may charge a fee of up to 1% of the loan amount. It may waive the fee, and it does not charge one if the loan is denied or never closes ⁠⁵. Once a loan is approved, the borrower’s name, location, loan amount and projected jobs become public ⁠⁵.

State law (SDCL 1-16G-68) bars anyone working on a project from being paid a commission that depends on winning a state grant, loan or reinvestment payment. Applicants must certify this ⁠⁵, so be wary of a “grant consultant” who wants a percentage of your award.

Proof of Concept and SBIR awards for South Dakota innovators

Proof of Concept is the closest thing South Dakota has to a startup grant, and it pays only for research ⁠⁸:

Scroll the table sideways to see every column.

Entrepreneurs, universities and existing South Dakota companies can apply at any time. You must apply before the work begins, and for Phase 0 or Supplement, before the federal Phase I or Phase II deadline ⁠⁸. The money cannot pay owners’ salaries, incorporation or patent legal fees, sales costs, rent, accounting or indirect costs ⁠⁸.

This is not free money. If the research succeeds or you win an SBIR award, GOED converts the award into a promissory note at 0% interest for up to five years, with annual reviews ⁠⁸. Phase 0 is paid as a reimbursement after you prove you submitted the federal proposal; other projects get $5,000 up front, with the last 20% held until the final report ⁠⁸. The guidelines posted on GOED’s site date from 2019, so confirm the current terms with GOED before you apply.

Training money: GOED’s Workforce Development grant versus DLR’s programs

GOED Workforce Development Program. Paid for by the state’s Future Fund, it reimburses up to half of technical training costs, matched dollar for dollar by the company. The typical award is about $1,000 per trainee ⁠⁶. To qualify, the training must be for new positions created by growth, or for retraining that comes with a raise. Trainees must earn at least $19.50 an hour and work full time, and the company must pay part of their health insurance. GOED can waive the wage floor in communities under 5,000 people ⁠⁶. Apply at least three weeks before training; GOED responds in about 30 days ⁠⁶. But GOED’s public approval list for calendar 2025 shows no Workforce Development grants at all ⁠⁷, so confirm funding before you count on it.

DLR Incumbent Worker Training (IWT). IWT pays for third-party training for current employees, up to $20,000 per business per program year (July 1 to June 30). Funding is first come, first served ⁠⁹. Your business must be at least one year old with a South Dakota presence. Each trainee must work at least 32 hours a week in a permanent job, have at least six months with you, and hold a job on DLR’s Hot Careers list. Trainees must also get a raise after the training ⁠⁹.

Apply 30 to 180 days before training starts. DLR answers or asks for more information within 15 business days ⁠⁹.

On-the-Job Training (OJT). If you hire someone enrolled in a WIOA or TANF program through DLR, DLR reimburses up to 50% of that trainee’s wages. WIOA contracts are limited to 320 hours. Sign the contract before the hire starts; commission, piece-rate and seasonal jobs do not qualify ⁠¹⁰.

Start Today apprenticeship incentives. DLR pays $5,000 for each eligible new apprentice who started on or after January 1, 2026, up to five per program year. The apprentice must have worked full time for six months after being registered. Organizations launching their first Registered Apprenticeship Program can get a one-time $7,500 incentive once a registered apprentice has stayed six months ⁠¹¹. None is guaranteed ⁠¹¹.

SD STEP export grants between grant periods

South Dakota Trade, a 501(c)(6) group designated by GOED for international trade, runs SD STEP with SBA funding. STEP reimburses up to 75% of approved export costs such as foreign trade shows, sales trips, export website translation, foreign certifications and one person’s economy airfare and hotel. Salaries, meals, product development and conference registrations are not covered ⁠¹².

The current grant period ran from September 30, 2024 to September 29, 2026. Funds went to approved companies first come, first served ⁠¹². As of October 20, 2026, South Dakota Trade had not posted dates for a new period. To qualify for the next one, a company must be an SBA-eligible small business with profitable U.S. operations, export products with at least 51% U.S. content, and be in good standing with the South Dakota Department of Revenue and the IRS ⁠¹².

Regional lenders: the REED Fund and tribal SSBCI allocations

Outside state government, the Rural Electric Economic Development (REED) Fund, governed since 1996 by 27 electric cooperatives in South Dakota and Minnesota, lends alongside commercial banks. It has originated $135 million in repayable loans across 417 projects, 188 of them business and industry ⁠¹⁵. Contact REED in Madison at 605-256-4536, or ask your local electric co-op.

Treasury also gave separate SSBCI allocations to tribal governments in South Dakota. These include $7,853,178 to the Rosebud Sioux Tribe, $4,937,944 to the Cheyenne River Sioux Tribe and $3,576,734 to the Standing Rock Sioux Tribe of North and South Dakota ⁠³. The tribes, not GOED, run these programs, so ask your tribal economic development office.

Working through South Dakota’s SBDC and GOED, step by step

The South Dakota SBDC is an outreach program of the University of South Dakota’s Beacom School of Business. It offers confidential consulting at no cost from offices in Sioux Falls, Rapid City, Aberdeen, Watertown, Pierre and Yankton. It works on about 1,200 projects a year, 70% of them start-ups ⁠¹³.

1. Book a free SBDC appointment

   Call 605-367-5757 to reach the office nearest you ⁠¹³. Bring a draft business plan, financials or projections, and the amount you need.

2. Get a bank on board

   SD Works needs at least a 1:1 match from another lender, and both GOED loans need commitment letters from your lenders ⁠¹⁠⁵. Ask your banker to request SD Works as gap financing.

3. Call GOED before you file

   A business development representative (605-773-4633) can tell you whether REDI or SD Works fits your project ⁠¹.

4. File the 2026 REDI and SD Works application

   Attach the lender letters and financials listed above. Expect a fee of up to 1% of the loan if the loan closes ⁠⁵.

5. Line up training money before training starts

   Apply to DLR Incumbent Worker Training 30 to 180 days ahead ⁠⁹. Apply to GOED Workforce Development at least three weeks ahead, after confirming it is funding projects ⁠⁶⁠⁷.

6. For research or SBIR work, apply to Proof of Concept first

   Submit before any work begins and before the federal deadline. Keep receipts, because Phase 0 pays only after you prove you submitted the federal proposal ⁠⁸.

7. If you are turned down, change the deal and try again

   Ask the SBDC to help rework your equity or projections, or try another bank. Reapply for DLR or STEP money when the next program year or grant period opens ⁠⁹⁠¹².

See also the South Dakota overview and the small business grants hub.