PIERRE, SD - Gov. Dennis Daugaard says South Dakota is starting a new loan program to help South Dakota's small businesses expand.
The program, called South Dakota WORKS, is funded by a $13.2 million grant from the U.S. Treasury Department. It will provide small businesses with working capital, startup funds and money for payroll and inventory.
Daugaard says the new program will complement existing loan programs operated by the Governor's Office of Economic development. He says the nation's economic problems have made it difficult for businesses to borrow the working capital they need for expansion projects.
The governor says the state expects the program will generate at least $10 in private lending for every $1 in federal spending. That would mean the $13.2 million federal grant will support $132 million in private lending.
SCDC NOTE: In addition, the Tripp County Revolving Loan Fund is available to new and expanding businesses in Tripp County, SD. Interest rates are currently at 3%. For more information, check out and download an RLF application today.
Tuesday, October 4, 2011
Friday, September 2, 2011
Tips for Securing Business Loans
Tips for Securing Business Loans
Justin Graves
The Writers Network Posted on August 10th, 2011
If you are searching for business loans, there are several tips and tactics you can use to identify and secure the business loans that are right for you. Whether you own a small business or a medium-size business, securing bank loans to finance your operations can be a challenging and intimidating process.
However, if you take enough time to prepare your records and business plans, you should be able to increase your chances of securing a loan for your business. Of course, choosing the right bank is perhaps the most important component when it comes to securing a loan for your business.
First, you should try to choose a bank that has ties to your chosen industry or business plans. For instance, if you are starting your own small business, you should look for banks that deal with small business financing. This will increase your chances of obtaining funding for your small business.
Of course, you need to have all your ducks in a row before approaching any bank for a small business loan. This means you should have some type of report that covers your financial records and projections over the next three years. You should also include a section that describes your business and those involved with it. Also, you should complete a loan application ahead of time so you look prepared and professional.
Next, preparation can be one of the most powerful tools when it comes to securing small business loans. In other words, put yourself in the position of the loan officer and look for any weaknesses in your plan or loan application.
This will allow you to increase your confidence and improve your chances of securing a business loan. This process should also help you to narrow down exactly how much money you require, exactly how you plan to use it, and how you expect to repay it. During the interview, you should appear as confident as possible so the loan officer knows that you are capable of repaying the loan.
If you have any articles or advertisements related to your business, you should bring those along as well to solidify your professional appearance and demeanor.
Next, you should try to be as truthful as possible in your loan application as well as during the interview. Loan officers are trained to double check the facts and lying will likely do much more damage than it will good.
Again, the best way to prepare yourself for the interview is to go over all aspects of your application so you can confidently answer any questions that may be thrown at you. Also, if you have any hand written documents, you might want to consider typing them up to make them look more professional.
Finally, don't worry if one specific bank does not approve your loan since there are many more that you can try out. The key is that you remain positive and keep pushing until you found the loan that is perfect for your business.
Justin Graves
The Writers Network Posted on August 10th, 2011
If you are searching for business loans, there are several tips and tactics you can use to identify and secure the business loans that are right for you. Whether you own a small business or a medium-size business, securing bank loans to finance your operations can be a challenging and intimidating process.
However, if you take enough time to prepare your records and business plans, you should be able to increase your chances of securing a loan for your business. Of course, choosing the right bank is perhaps the most important component when it comes to securing a loan for your business.
First, you should try to choose a bank that has ties to your chosen industry or business plans. For instance, if you are starting your own small business, you should look for banks that deal with small business financing. This will increase your chances of obtaining funding for your small business.
Of course, you need to have all your ducks in a row before approaching any bank for a small business loan. This means you should have some type of report that covers your financial records and projections over the next three years. You should also include a section that describes your business and those involved with it. Also, you should complete a loan application ahead of time so you look prepared and professional.
Next, preparation can be one of the most powerful tools when it comes to securing small business loans. In other words, put yourself in the position of the loan officer and look for any weaknesses in your plan or loan application.
This will allow you to increase your confidence and improve your chances of securing a business loan. This process should also help you to narrow down exactly how much money you require, exactly how you plan to use it, and how you expect to repay it. During the interview, you should appear as confident as possible so the loan officer knows that you are capable of repaying the loan.
If you have any articles or advertisements related to your business, you should bring those along as well to solidify your professional appearance and demeanor.
Next, you should try to be as truthful as possible in your loan application as well as during the interview. Loan officers are trained to double check the facts and lying will likely do much more damage than it will good.
Again, the best way to prepare yourself for the interview is to go over all aspects of your application so you can confidently answer any questions that may be thrown at you. Also, if you have any hand written documents, you might want to consider typing them up to make them look more professional.
Finally, don't worry if one specific bank does not approve your loan since there are many more that you can try out. The key is that you remain positive and keep pushing until you found the loan that is perfect for your business.
Thursday, March 31, 2011
Eleutian Technology Looking to Open Winner Training Center
From Rapid City Journal Online at rapidcityjournal.com
Company will hire teachers to give video English lessonsBarbara Soderlin Journal staff Rapid City Journal
A Wyoming company that hires certified teachers to give English lessons overseas using video conferencing technology said it plans to hire 50 teachers in Spearfish, 120 in Rapid City and 30 in Winner.
The work pays an average of $11 to $13 an hour and teachers can work part-time to supplement their incomes, said David Baker, vice president of Cody, Wyo.-based Eleutian Technology.
The Governor's Office of Economic Development announced Tuesday that it recruited Eleutian with grants of up to $400,000 in state Workforce Training Dollars and up to $50,000 in technology assistance through the Future Fund.
Eleutian has leased space and is now hiring a teacher supervisor for its Spearfish center. It is also accepting applications for teacher positions in Spearfish at its website at www.eleutian.com. When that center is established, it plans to open offices in Rapid City and then Winner.
Eleutian teachers partner with English-speaking classroom teachers in South Korea, Japan and China to deliver live video lessons. They bring the benefit of fluency in conversational English and a flat, Midwestern accent that is easy to understand and beneficial in business, Baker said.
He expects to have no problem filling the available positions with teachers looking to earn extra income. Under the agreement for the state grants, Eleutian must offer teachers at least 25 hours a week and provide benefits including health insurance with a portion of the premium paid.
"We're not trying to recruit all the teachers to leave the public school system," Baker said.
He said he considers the $11 to $13 an hour a good wage because a starting teacher in South Dakota might earn $28,000 a year. A person working 40 hours a week at $13 an hour would earn $27,040 a year.
However, a Rapid City school teacher's contract is based on a 183.5-day schedule, and a person earning $27,040 a year on that schedule would earn $18.42 an hour working eight hours a day.
Eleutian was founded in Ten Sleep, Wyo., in 2006 by Kent Holiday, who had worked in telecommunications in South Korea and saw a market for English lessons. The company relocated recently to Cody and now has nine centers in Wyoming and one in Utah. It is also being recruited to set up centers in Montana, the Billings Gazette reported.
The company trains teachers to use its platform and curriculum, and then lets them set their own hours and teach the English classes from home or from an Eleutian center.
The Eleutian Spearfish Teaching Center will be at 741 N. Main St. Suite 4, in the Spearfish Plaza building. The 1,400-square-foot space will hold 20 workstations that can be used for teacher training and overseas instruction.
"We're excited to welcome the company to Spearfish," said Bryan Walker, executive director of the Spearfish Economic Development Corporation. "It'll be a wonderful addition to the community."
In addition to the state incentives, the Spearfish Economic Development Corporation is also helping Eleutian with initial training costs and with leasing expenses, Walker said. He declined to say how much the company will receive.
"In Spearfish, one of our assets here is Black Hills State University and the outstanding teachers that they graduate from that program," Walker said. "It would be another opportunity for some younger teachers to earn additional income or to stay in the area utilizing technology."
Contact Barbara Soderlin at 394-8417 or barbara.soderlin@rapidcityjournal.com.
Company will hire teachers to give video English lessonsBarbara Soderlin Journal staff Rapid City Journal
A Wyoming company that hires certified teachers to give English lessons overseas using video conferencing technology said it plans to hire 50 teachers in Spearfish, 120 in Rapid City and 30 in Winner.
The work pays an average of $11 to $13 an hour and teachers can work part-time to supplement their incomes, said David Baker, vice president of Cody, Wyo.-based Eleutian Technology.
The Governor's Office of Economic Development announced Tuesday that it recruited Eleutian with grants of up to $400,000 in state Workforce Training Dollars and up to $50,000 in technology assistance through the Future Fund.
Eleutian has leased space and is now hiring a teacher supervisor for its Spearfish center. It is also accepting applications for teacher positions in Spearfish at its website at www.eleutian.com. When that center is established, it plans to open offices in Rapid City and then Winner.
Eleutian teachers partner with English-speaking classroom teachers in South Korea, Japan and China to deliver live video lessons. They bring the benefit of fluency in conversational English and a flat, Midwestern accent that is easy to understand and beneficial in business, Baker said.
He expects to have no problem filling the available positions with teachers looking to earn extra income. Under the agreement for the state grants, Eleutian must offer teachers at least 25 hours a week and provide benefits including health insurance with a portion of the premium paid.
"We're not trying to recruit all the teachers to leave the public school system," Baker said.
He said he considers the $11 to $13 an hour a good wage because a starting teacher in South Dakota might earn $28,000 a year. A person working 40 hours a week at $13 an hour would earn $27,040 a year.
However, a Rapid City school teacher's contract is based on a 183.5-day schedule, and a person earning $27,040 a year on that schedule would earn $18.42 an hour working eight hours a day.
Eleutian was founded in Ten Sleep, Wyo., in 2006 by Kent Holiday, who had worked in telecommunications in South Korea and saw a market for English lessons. The company relocated recently to Cody and now has nine centers in Wyoming and one in Utah. It is also being recruited to set up centers in Montana, the Billings Gazette reported.
The company trains teachers to use its platform and curriculum, and then lets them set their own hours and teach the English classes from home or from an Eleutian center.
The Eleutian Spearfish Teaching Center will be at 741 N. Main St. Suite 4, in the Spearfish Plaza building. The 1,400-square-foot space will hold 20 workstations that can be used for teacher training and overseas instruction.
"We're excited to welcome the company to Spearfish," said Bryan Walker, executive director of the Spearfish Economic Development Corporation. "It'll be a wonderful addition to the community."
In addition to the state incentives, the Spearfish Economic Development Corporation is also helping Eleutian with initial training costs and with leasing expenses, Walker said. He declined to say how much the company will receive.
"In Spearfish, one of our assets here is Black Hills State University and the outstanding teachers that they graduate from that program," Walker said. "It would be another opportunity for some younger teachers to earn additional income or to stay in the area utilizing technology."
Contact Barbara Soderlin at 394-8417 or barbara.soderlin@rapidcityjournal.com.
Wednesday, February 23, 2011
SMALL BUSINESS JOBS ACT: 504 LOAN PROGRAM DEBT REFINANCING
• On September 27, 2010, the Small Business Jobs Act of 2010, P.L. 111-240 (Jobs Act) was signed into law.
• The Jobs Act temporarily extends the 504 program to allow refinance without business expansion.
• SBA has $15 billion in program authority for this commercial real estate and equipment refinance program. However, the amount of owner-occupied commercial real estate that has lost significant value is many times this amount.
• All loans must be approved by September 27, 2012. SBA will begin accepting applications on February 28, 2011.
• In order to first help those small businesses most in need of assistance and facing potential foreclosure, SBA is opening up this temporary program first to small businesses that have a mortgage coming due for renewal on or before December 31, 2012.
• Once SBA has satisfied the immediate demand for this most needy class of small businesses, it will open the program to other small businesses that have balloon notes and ultimately to small businesses that would realize a substantial cash flow benefit as a result of the program.
• In this way, SBA will maximize the impact of this program on saving small businesses, retaining and creating jobs and helping to stabilize commercial real estate values.
• SBA is reviewing how best to enact the cash out provision of the Act and is soliciting public comment.
• All loans must be funded by the sale of the debenture within six (6) months of approval. Loans will be cancelled by SBA if not funded during this period.
• CDC must report any delinquency to SBA after loan approval but before loan funding as an adverse change.
• There will be an ongoing guarantee fee of 1.043% on the total unpaid balance of the debenture. This fee will be reviewed at the close of the first year.
ELIGIBILITYEligible Project Costs
504 loan proceeds are to be used to refinance the Qualified Debt and other eligible costs permitted for 504 loans under 13 CFR § 120.882 (c) and (d) and 120.883 (see Job Documentation Addendum).
Loan Structure & Conditions
Funding for the Refinancing Project must come from
three (3) sources:
1.) Third Party Lender - not less than 50%
2.) SBA 504 Loan - not more than 40%
3.) Borrower - not less than 10%
• For debt refinancing only, not for expansion or the purchase of real estate or other fixed assets.
• Substantially all (85% or more) of the proceeds of the loan being refinanced must have been used for 504 eligible purposes. All of the proceeds must have been used for the benefit of the small business concern.
• Loans being refinanced must be maturing on or before December 31, 2012.
• At a later date, SBA may allow other balloons, as well as loans that can demonstrate strong needs in other ways.
• Loans being refinanced must have been current for the past year with no payment being deferred or past due for more than 30 days. Transcript must be provided to demonstrate compliance with this requirement.
• Debt must have been incurred not less than two (2) years prior to the date the application is received by SBA.
• Small business concern must have been in business for two years prior to the submission of the application.
Eligibility - Alternative Job Retention Goals
• Debt may be refinanced even if it does not meet the job creation or other economic development objectives set forth in 13 CFR § 120.861 or § 120.862. “Improving, diversifying or stabilizing the economy of the locality.” 13 CFR § 120.862(a)(1)
• In such case, the 504 loan size may not exceed the product obtained by multiplying the number of full-time equivalent employees (40 hour work week) of the Borrower by $65,000.
Documenting Job Retention
Dollar per Job Ratio Calculation:
30 full-time employees and 35 part-time employees working 20 hours per week is calculated as follows:
30 + (35 x (20/40)) = 47.5
(20/40 = .5; 35 x .5 = 17.5; 30 + 17.5 = 47.5)
The maximum amount available for the 504 loan:
$65,000 x 47.5 = $3,087,500
When applying the alternative job retention standard, the number of employees is equal to:
a) the number of full-time employees on the date of application, plus
b) The product obtained by multiplying:
i. the number of part-time employees on the date of application, by
ii. The quotient obtained by dividing the average number of hours each part-time employee works each week by 40
Amount of Third Party Loan and 504 Loan
• The Third Party loan and the 504 loan combined may not be more than 90% of the fair market value of the fixed assets securing the loan.
• In no event may it exceed the outstanding principal balance of the debt being refinanced.
If the amount of the refinance is not sufficient to repay the entire outstanding debt, the CDC must disclose how the balance of the debt will be handled, as noted below.
The lender of the Qualified Debt may:
a) forgive all or part of the deficiency (which may have tax consequences for the Borrower)
b) accept payment from the Borrower for all or part of the deficiency,
c) accept a new Note for the balance which will be subordinate to the liens of the Third Party Lender and SBA. Such notes will contain at least a
three-year stand-by requirement.
SBA will determine what effect, if any, the disposition of the deficiency has on the Borrower’s creditworthiness and may place additional restrictions on any remaining debt, such as requiring that it be placed on standby during the term of the 504 loan.
ELIGIBLE USE OF PROCEEDS CERTIFICATION• The Borrower must certify that the debt meets the eligible use of proceeds standard and the Third Party Lender must also certify that it has no reason to believe that the debt does not meet this standard.
• Third Party Lender must certify that it would not make the loan without SBA’s participation.
• To comply with the requirements with respect to no refinancing where the creditor is in a position to sustain a loss causing a shift to the SBA, the Third Party Lender and the CDC must certify that they have no knowledge of a default by the Borrower nor knowledge or information that would point to the likelihood of a default.
• SLPC will conduct a random sampling and contact the CDC if additional information is needed to support the certifications.
BORROWER’S CONTRIBUTIONIn addition to a cash contribution, the Borrower’s 10% contribution may be satisfied by its equity in the Eligible Fixed Asset(s) serving as collateral for the Refinancing Project or by the equity in any other fixed assets that are acceptable to SBA as collateral.
An independent appraisal of the fair market value of the project assets and any additional assets offered as additional collateral must be provided.
• No additional contribution from the Borrower will be required when the fixed assets servicing as collateral is a limited or special purpose building.
• If the outstanding principal balance on the existing loan is more than the current fair market value of the Eligible Fixed Assets securing the loan being refinanced, SBA will permit the Borrower to contribute the equity in other fixed assets acceptable to SBA as collateral to increase the amount of the Refinancing Project.
• Acceptable fixed assets may be any other 504-eligible fixed assets, other commercial property or a personal residence.
• The Third party Loan and the 504 Loan will not exceed 90% of the fair market value of all of the fixed assets servicing as collateral for the Refinancing Project.
SAME INSTITUTION DEBT• For same institution debt the transcript of account for the entire period of the loan must be provided. This will be used to determine overall creditworthiness of the Borrower.
This is to prevent 12-month rehabilitation of otherwise poor credits from qualifying.
• The Third Party Lender must set forth in its commitment letter that it will not make the loan without SBA’s participation.
• The Third Party Lender must certify to the CDC and SBA that the TPL has no knowledge of a default by the Borrower and has no knowledge or information that indicates the likelihood of a default.
• When the debt being refinanced is same institution debt, the Third Party Loan cannot be sold on the secondary market as part of a pool of guaranteed loans as per 13 CFR 120, Subpart J.
LIEN POSITIONSLiens positions on the Eligible Fixed Assets securing the Refinancing Project must be first and second for the Third Party Lender and SBA, respectively. Any other lien must be junior in priority to these lien positions.
When other fixed assets are offered as collateral, the SBA and Third Party Lender liens may be junior to any previously existing liens on that collateral. Such collateral may include commercial and residential real estate and/or machinery and equipment where fair market value can be determined by an independent appraisal.
APPRAISAL REQUIREMENTS•
An independent appraisal must be submitted by the CDC supporting the fair market value of the fixed assets being refinanced and any other assets being offered as collateral whether commercial or residential. This appraisal must be dated within six (6) months of the date of application.
• The qualifications of the appraiser and requirements of the report are outlined in SOP 50-10-5.
RESTRICTIONS
• No refinancing of loans with an existing federal guaranty. (e.g. a 7(a) loan or USDA loan)
• No refinancing of debt if it is to an Associate of the Borrower or a SBIC or New Market Ventures Capital Companies (NMVCC).
• No refinancing of loans which is already part of an existing 504 project.
• No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss causing a shift to SBA or all or a portion of a potential loss from an existing debt.
JOBS ACT 504 DEBT REFINANCE PROJECT EXAMPLES
The following examples illustrate potential loan structures for over-collateralized and under-collateralized refinancing projects :
Example 1) over-collateralized
Example 2) slightly over-collateralized
Example 3) under-collateralized
Example 4) under-collateralized (with additional collateral that increases project size)
In each example, the fair market value of the Eligible Fixed Assets securing the refinancing is based on an independent appraisal as noted in the example.
Example 1 – Over-collateralized
Appraised Value of Property $600,000
Outstanding Balance of Debt $500,000
The value of the collateral securing the project exceeds the outstanding principal balance of the debt. Lien is less than 90% of the appraised value.
Project
Third Party Loan $ 300,000 (50% of appraised value)
SBA 504 Loan 200,000 (balance of existing lien – 33.3% in example )
Borrower’s Contribution 100,000 (all equity in project – 16.7% in example)
Total Project $ 600,000 (100%)
• This meets the requirements of the TPL at 50% of the appraised value, TPL + SBA does not exceed the amount being refinanced, borrower injection meets/exceeds 10% of the appraised value.
• In this example, the value of the collateral securing the Refinancing Project ($600,000) exceeds the outstanding principal balance of the existing indebtedness ($500,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed the outstanding principal balance of the existing debt or $500,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must contribute at 50% of $600,000 or $300,000 and the Borrower must contribute at 10% of $600,000 or $60,000.
• The Borrower’s contribution may be satisfied with the Borrower’s $100,000 equity in the Eligible Fixed Assets securing the Refinancing Project, which in this example is 16.7%.
• The 504 loan would provide $200,000, for a total of $500,000 in cash to pay off the existing indebtedness.
Example 2 – Slightly over-collateralized
Appraised Value of Property $540,000
Outstanding Balance of Debt $500,000
The value of the collateral securing the project is greater than the outstanding principal balance of the debt. Lien is slightly greater than 90% of the appraised value. No additional assets are being injected into the project.
Project
Third Party Loan $ 270,000 (50% of appraised value)
SBA 504 Loan 216,000 (40% of appraised value )
Borrower’s Contribution 54,000 (10% of appraised value: $40,000 equity and $14,000 cash from the borrower)
Total Project $ 540,000 (100%)
• This meets the requirements of TPL and 504 being no more than 90% of appraised value with TPL at 50% of appraised value. The Borrower injection is 10% of the appraised value.
• The fair market value of the Eligible Fixed Assets securing the loan based on an independent appraisal is $540,000 and the outstanding principal balance of the existing indebtedness is $500,000. The Lien is slightly greater than 90% of the appraised value. No additional assets are being injected into the project.
• In this example, the value of the collateral securing the Refinancing Project ($540,000) slightly exceeds the outstanding principal balance of the existing indebtedness ($500,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed 90% of the fair market value of the Eligible Fixed Assets, or $486,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must be $270,000, or 50% of the fair market value; the Borrower’s contribution must be $54,000, or 10% of the fair market value; the 504 loan would be $216,000.
• In this case, $40,000 of the Borrower’s contribution could be the equity in the property. The remaining $14,000 must be cash.
Example 3 – Under-collateralized
Appraised Value of Property $600,000
Outstanding Balance of Debt $800,000
The value of the collateral securing the project is less than the outstanding principal balance of the debt. Existing lien exceeds the appraised value. No additional assets are being injected into the project.
Project
Third Party Loan $ 300,000 (50% of appraised value)
SBA 504 Loan 240,000 (40% of appraised value)
Borrower’s Contribution 60,000 (10% of appraised value)
Total Project $ 600,000 (100%)
• In this example, the value of the Eligible Fixed Assets securing the Refinancing Project ($600,000) is less than the outstanding principal balance of the existing indebtedness ($800,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed 90% of the fair market value of the Eligible Fixed Assets securing the loan ($600,000) or $540,000.
• The Third Party Lender must contribute at least 50% of the fair market value of the Eligible Fixed Assets securing the loan, or $300,000. The Borrower must contribute at least 10% of the fair market value of the Eligible Fixed Assets securing the loan, or $60,000. Then the 504 loan contributes at most $240,000, or a total of $600,000.
• With the total amount of the refinancing being equal to the fair market value of the fixed assets securing the refinancing, the lender of the debt being refinanced must reduce the existing loan from $800,000 to $600,000, through one of the following actions, or some combination thereof:
1.) forgiveness,
2.) payment by the Borrower, or
3.) requiring the Borrower to execute a Note for the balance, or any portion of the balance. This Note must be subordinate to the 504 loan if secured by any of the same collateral and is subject to any other restrictions that SBA may establish, including standby requirements.
Example 4 – Under-collateralized
Appraised Value of Property $ 600,000 (project property)
Appraised Value of all Eligible Fixed Assets $ 900,000 ($600,000 project property + $300,000 additional Eligible Fixed Assets from Borrower)
Outstanding Balance of Debt $ 800,000
The value of the collateral securing the project is less than the outstanding principal balance of the debt. Additional assets are pledged which increase the project size. Existing lien exceeds the appraised value. Borrower has additional Eligible Fixed Assets with Equity of $300,000 that will be included in the project.
Project
Third Party Loan $ 450,000 (50% of appraised value of all eligible fixed assets)
SBA 504 Loan 350,000 (38.9% in this example, to pay off existing lien)
Borrower’s Contribution $100,000 (11.1% in this example, all equity in project)
Total Project $ 900,000 (100%)
• In this example, the value of the collateral securing the Refinancing Project ($600,000) is less than the outstanding principal balance of the existing indebtedness ($800,000). The borrower has additional eligible fixed assets with equity of $300,000 that will be included in the project. The total fair market value of the Eligible Fixed Assets securing the loan based on an independent appraisal(s) is now $900,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must contribute at least 50% of $900,000, or $450,000, and the Borrower must contribute at least 50% of $900,000, or $450,000, and the Borrower must contribute at least 10% of $900,000, or $90,000.
• The Borrower’s contribution may be satisfied with the Borrower’s $100,000 equity in the Eligible Fixed Assets securing the Refinancing Project, which in this case will be 11.1%.
• The 504 loan would provide $350,000, for a total of $800,000 in cash to pay off the existing indebtedness.
• The Jobs Act temporarily extends the 504 program to allow refinance without business expansion.
• SBA has $15 billion in program authority for this commercial real estate and equipment refinance program. However, the amount of owner-occupied commercial real estate that has lost significant value is many times this amount.
• All loans must be approved by September 27, 2012. SBA will begin accepting applications on February 28, 2011.
• In order to first help those small businesses most in need of assistance and facing potential foreclosure, SBA is opening up this temporary program first to small businesses that have a mortgage coming due for renewal on or before December 31, 2012.
• Once SBA has satisfied the immediate demand for this most needy class of small businesses, it will open the program to other small businesses that have balloon notes and ultimately to small businesses that would realize a substantial cash flow benefit as a result of the program.
• In this way, SBA will maximize the impact of this program on saving small businesses, retaining and creating jobs and helping to stabilize commercial real estate values.
• SBA is reviewing how best to enact the cash out provision of the Act and is soliciting public comment.
• All loans must be funded by the sale of the debenture within six (6) months of approval. Loans will be cancelled by SBA if not funded during this period.
• CDC must report any delinquency to SBA after loan approval but before loan funding as an adverse change.
• There will be an ongoing guarantee fee of 1.043% on the total unpaid balance of the debenture. This fee will be reviewed at the close of the first year.
ELIGIBILITYEligible Project Costs
504 loan proceeds are to be used to refinance the Qualified Debt and other eligible costs permitted for 504 loans under 13 CFR § 120.882 (c) and (d) and 120.883 (see Job Documentation Addendum).
Loan Structure & Conditions
Funding for the Refinancing Project must come from
three (3) sources:
1.) Third Party Lender - not less than 50%
2.) SBA 504 Loan - not more than 40%
3.) Borrower - not less than 10%
• For debt refinancing only, not for expansion or the purchase of real estate or other fixed assets.
• Substantially all (85% or more) of the proceeds of the loan being refinanced must have been used for 504 eligible purposes. All of the proceeds must have been used for the benefit of the small business concern.
• Loans being refinanced must be maturing on or before December 31, 2012.
• At a later date, SBA may allow other balloons, as well as loans that can demonstrate strong needs in other ways.
• Loans being refinanced must have been current for the past year with no payment being deferred or past due for more than 30 days. Transcript must be provided to demonstrate compliance with this requirement.
• Debt must have been incurred not less than two (2) years prior to the date the application is received by SBA.
• Small business concern must have been in business for two years prior to the submission of the application.
Eligibility - Alternative Job Retention Goals
• Debt may be refinanced even if it does not meet the job creation or other economic development objectives set forth in 13 CFR § 120.861 or § 120.862. “Improving, diversifying or stabilizing the economy of the locality.” 13 CFR § 120.862(a)(1)
• In such case, the 504 loan size may not exceed the product obtained by multiplying the number of full-time equivalent employees (40 hour work week) of the Borrower by $65,000.
Documenting Job Retention
Dollar per Job Ratio Calculation:
30 full-time employees and 35 part-time employees working 20 hours per week is calculated as follows:
30 + (35 x (20/40)) = 47.5
(20/40 = .5; 35 x .5 = 17.5; 30 + 17.5 = 47.5)
The maximum amount available for the 504 loan:
$65,000 x 47.5 = $3,087,500
When applying the alternative job retention standard, the number of employees is equal to:
a) the number of full-time employees on the date of application, plus
b) The product obtained by multiplying:
i. the number of part-time employees on the date of application, by
ii. The quotient obtained by dividing the average number of hours each part-time employee works each week by 40
Amount of Third Party Loan and 504 Loan
• The Third Party loan and the 504 loan combined may not be more than 90% of the fair market value of the fixed assets securing the loan.
• In no event may it exceed the outstanding principal balance of the debt being refinanced.
If the amount of the refinance is not sufficient to repay the entire outstanding debt, the CDC must disclose how the balance of the debt will be handled, as noted below.
The lender of the Qualified Debt may:
a) forgive all or part of the deficiency (which may have tax consequences for the Borrower)
b) accept payment from the Borrower for all or part of the deficiency,
c) accept a new Note for the balance which will be subordinate to the liens of the Third Party Lender and SBA. Such notes will contain at least a
three-year stand-by requirement.
SBA will determine what effect, if any, the disposition of the deficiency has on the Borrower’s creditworthiness and may place additional restrictions on any remaining debt, such as requiring that it be placed on standby during the term of the 504 loan.
ELIGIBLE USE OF PROCEEDS CERTIFICATION• The Borrower must certify that the debt meets the eligible use of proceeds standard and the Third Party Lender must also certify that it has no reason to believe that the debt does not meet this standard.
• Third Party Lender must certify that it would not make the loan without SBA’s participation.
• To comply with the requirements with respect to no refinancing where the creditor is in a position to sustain a loss causing a shift to the SBA, the Third Party Lender and the CDC must certify that they have no knowledge of a default by the Borrower nor knowledge or information that would point to the likelihood of a default.
• SLPC will conduct a random sampling and contact the CDC if additional information is needed to support the certifications.
BORROWER’S CONTRIBUTIONIn addition to a cash contribution, the Borrower’s 10% contribution may be satisfied by its equity in the Eligible Fixed Asset(s) serving as collateral for the Refinancing Project or by the equity in any other fixed assets that are acceptable to SBA as collateral.
An independent appraisal of the fair market value of the project assets and any additional assets offered as additional collateral must be provided.
• No additional contribution from the Borrower will be required when the fixed assets servicing as collateral is a limited or special purpose building.
• If the outstanding principal balance on the existing loan is more than the current fair market value of the Eligible Fixed Assets securing the loan being refinanced, SBA will permit the Borrower to contribute the equity in other fixed assets acceptable to SBA as collateral to increase the amount of the Refinancing Project.
• Acceptable fixed assets may be any other 504-eligible fixed assets, other commercial property or a personal residence.
• The Third party Loan and the 504 Loan will not exceed 90% of the fair market value of all of the fixed assets servicing as collateral for the Refinancing Project.
SAME INSTITUTION DEBT• For same institution debt the transcript of account for the entire period of the loan must be provided. This will be used to determine overall creditworthiness of the Borrower.
This is to prevent 12-month rehabilitation of otherwise poor credits from qualifying.
• The Third Party Lender must set forth in its commitment letter that it will not make the loan without SBA’s participation.
• The Third Party Lender must certify to the CDC and SBA that the TPL has no knowledge of a default by the Borrower and has no knowledge or information that indicates the likelihood of a default.
• When the debt being refinanced is same institution debt, the Third Party Loan cannot be sold on the secondary market as part of a pool of guaranteed loans as per 13 CFR 120, Subpart J.
LIEN POSITIONSLiens positions on the Eligible Fixed Assets securing the Refinancing Project must be first and second for the Third Party Lender and SBA, respectively. Any other lien must be junior in priority to these lien positions.
When other fixed assets are offered as collateral, the SBA and Third Party Lender liens may be junior to any previously existing liens on that collateral. Such collateral may include commercial and residential real estate and/or machinery and equipment where fair market value can be determined by an independent appraisal.
APPRAISAL REQUIREMENTS•
An independent appraisal must be submitted by the CDC supporting the fair market value of the fixed assets being refinanced and any other assets being offered as collateral whether commercial or residential. This appraisal must be dated within six (6) months of the date of application.
• The qualifications of the appraiser and requirements of the report are outlined in SOP 50-10-5.
RESTRICTIONS
• No refinancing of loans with an existing federal guaranty. (e.g. a 7(a) loan or USDA loan)
• No refinancing of debt if it is to an Associate of the Borrower or a SBIC or New Market Ventures Capital Companies (NMVCC).
• No refinancing of loans which is already part of an existing 504 project.
• No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss causing a shift to SBA or all or a portion of a potential loss from an existing debt.
JOBS ACT 504 DEBT REFINANCE PROJECT EXAMPLES
The following examples illustrate potential loan structures for over-collateralized and under-collateralized refinancing projects :
Example 1) over-collateralized
Example 2) slightly over-collateralized
Example 3) under-collateralized
Example 4) under-collateralized (with additional collateral that increases project size)
In each example, the fair market value of the Eligible Fixed Assets securing the refinancing is based on an independent appraisal as noted in the example.
Example 1 – Over-collateralized
Appraised Value of Property $600,000
Outstanding Balance of Debt $500,000
The value of the collateral securing the project exceeds the outstanding principal balance of the debt. Lien is less than 90% of the appraised value.
Project
Third Party Loan $ 300,000 (50% of appraised value)
SBA 504 Loan 200,000 (balance of existing lien – 33.3% in example )
Borrower’s Contribution 100,000 (all equity in project – 16.7% in example)
Total Project $ 600,000 (100%)
• This meets the requirements of the TPL at 50% of the appraised value, TPL + SBA does not exceed the amount being refinanced, borrower injection meets/exceeds 10% of the appraised value.
• In this example, the value of the collateral securing the Refinancing Project ($600,000) exceeds the outstanding principal balance of the existing indebtedness ($500,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed the outstanding principal balance of the existing debt or $500,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must contribute at 50% of $600,000 or $300,000 and the Borrower must contribute at 10% of $600,000 or $60,000.
• The Borrower’s contribution may be satisfied with the Borrower’s $100,000 equity in the Eligible Fixed Assets securing the Refinancing Project, which in this example is 16.7%.
• The 504 loan would provide $200,000, for a total of $500,000 in cash to pay off the existing indebtedness.
Example 2 – Slightly over-collateralized
Appraised Value of Property $540,000
Outstanding Balance of Debt $500,000
The value of the collateral securing the project is greater than the outstanding principal balance of the debt. Lien is slightly greater than 90% of the appraised value. No additional assets are being injected into the project.
Project
Third Party Loan $ 270,000 (50% of appraised value)
SBA 504 Loan 216,000 (40% of appraised value )
Borrower’s Contribution 54,000 (10% of appraised value: $40,000 equity and $14,000 cash from the borrower)
Total Project $ 540,000 (100%)
• This meets the requirements of TPL and 504 being no more than 90% of appraised value with TPL at 50% of appraised value. The Borrower injection is 10% of the appraised value.
• The fair market value of the Eligible Fixed Assets securing the loan based on an independent appraisal is $540,000 and the outstanding principal balance of the existing indebtedness is $500,000. The Lien is slightly greater than 90% of the appraised value. No additional assets are being injected into the project.
• In this example, the value of the collateral securing the Refinancing Project ($540,000) slightly exceeds the outstanding principal balance of the existing indebtedness ($500,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed 90% of the fair market value of the Eligible Fixed Assets, or $486,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must be $270,000, or 50% of the fair market value; the Borrower’s contribution must be $54,000, or 10% of the fair market value; the 504 loan would be $216,000.
• In this case, $40,000 of the Borrower’s contribution could be the equity in the property. The remaining $14,000 must be cash.
Example 3 – Under-collateralized
Appraised Value of Property $600,000
Outstanding Balance of Debt $800,000
The value of the collateral securing the project is less than the outstanding principal balance of the debt. Existing lien exceeds the appraised value. No additional assets are being injected into the project.
Project
Third Party Loan $ 300,000 (50% of appraised value)
SBA 504 Loan 240,000 (40% of appraised value)
Borrower’s Contribution 60,000 (10% of appraised value)
Total Project $ 600,000 (100%)
• In this example, the value of the Eligible Fixed Assets securing the Refinancing Project ($600,000) is less than the outstanding principal balance of the existing indebtedness ($800,000). Accordingly, the portion of the Refinancing Project that is funded by the 504 loan and the Third Party Loan may not exceed 90% of the fair market value of the Eligible Fixed Assets securing the loan ($600,000) or $540,000.
• The Third Party Lender must contribute at least 50% of the fair market value of the Eligible Fixed Assets securing the loan, or $300,000. The Borrower must contribute at least 10% of the fair market value of the Eligible Fixed Assets securing the loan, or $60,000. Then the 504 loan contributes at most $240,000, or a total of $600,000.
• With the total amount of the refinancing being equal to the fair market value of the fixed assets securing the refinancing, the lender of the debt being refinanced must reduce the existing loan from $800,000 to $600,000, through one of the following actions, or some combination thereof:
1.) forgiveness,
2.) payment by the Borrower, or
3.) requiring the Borrower to execute a Note for the balance, or any portion of the balance. This Note must be subordinate to the 504 loan if secured by any of the same collateral and is subject to any other restrictions that SBA may establish, including standby requirements.
Example 4 – Under-collateralized
Appraised Value of Property $ 600,000 (project property)
Appraised Value of all Eligible Fixed Assets $ 900,000 ($600,000 project property + $300,000 additional Eligible Fixed Assets from Borrower)
Outstanding Balance of Debt $ 800,000
The value of the collateral securing the project is less than the outstanding principal balance of the debt. Additional assets are pledged which increase the project size. Existing lien exceeds the appraised value. Borrower has additional Eligible Fixed Assets with Equity of $300,000 that will be included in the project.
Project
Third Party Loan $ 450,000 (50% of appraised value of all eligible fixed assets)
SBA 504 Loan 350,000 (38.9% in this example, to pay off existing lien)
Borrower’s Contribution $100,000 (11.1% in this example, all equity in project)
Total Project $ 900,000 (100%)
• In this example, the value of the collateral securing the Refinancing Project ($600,000) is less than the outstanding principal balance of the existing indebtedness ($800,000). The borrower has additional eligible fixed assets with equity of $300,000 that will be included in the project. The total fair market value of the Eligible Fixed Assets securing the loan based on an independent appraisal(s) is now $900,000.
• The contributions are calculated based on the fair market value of the Eligible Fixed Assets securing the Refinancing Project. Accordingly, the Third Party Lender’s loan must contribute at least 50% of $900,000, or $450,000, and the Borrower must contribute at least 50% of $900,000, or $450,000, and the Borrower must contribute at least 10% of $900,000, or $90,000.
• The Borrower’s contribution may be satisfied with the Borrower’s $100,000 equity in the Eligible Fixed Assets securing the Refinancing Project, which in this case will be 11.1%.
• The 504 loan would provide $350,000, for a total of $800,000 in cash to pay off the existing indebtedness.
Wednesday, January 5, 2011
Rural AED Grants Available
The Office of Rural Health Policy is pleased to announce a funding opportunity for the Rural Access to Emergency Devices (RAED) Grant Program.
The purpose of the RAED Grant Program is to 1) purchase automated external defibrillators (AEDs) that have been approved, or cleared for marketing, by the Food and Drug Administration; 2) provide defibrillator and basic life support training in automated external defibrillator usage through the American Heart Association, the American Red Cross, or other nationally recognized training courses, and 3) place the AEDs in rural communities with local organizations.
Applications are due February 28, 2011. To download this application, please go to www.grants.gov and click on Find Grant Opportunities, Basic Search, and type in HRSA-11-088 in the Funding Announcement Number. The new awards will be announced by August 1, 2011.
*Please Note: All applicants are highly encouraged to submit their applications at least 2 days in advance of the due date. Extensions or waivers are highly unlikely. All applications are required to be submitted in www.grants.gov . Paper applications are no longer acceptable.
The program contact is Eileen Holloran, eholloran@hrsa.gov or 301-443-7529.
The purpose of the RAED Grant Program is to 1) purchase automated external defibrillators (AEDs) that have been approved, or cleared for marketing, by the Food and Drug Administration; 2) provide defibrillator and basic life support training in automated external defibrillator usage through the American Heart Association, the American Red Cross, or other nationally recognized training courses, and 3) place the AEDs in rural communities with local organizations.
Applications are due February 28, 2011. To download this application, please go to www.grants.gov and click on Find Grant Opportunities, Basic Search, and type in HRSA-11-088 in the Funding Announcement Number. The new awards will be announced by August 1, 2011.
*Please Note: All applicants are highly encouraged to submit their applications at least 2 days in advance of the due date. Extensions or waivers are highly unlikely. All applications are required to be submitted in www.grants.gov . Paper applications are no longer acceptable.
The program contact is Eileen Holloran, eholloran@hrsa.gov or 301-443-7529.
Tuesday, December 7, 2010
Winner to Host Dale Carnegie Course
Structuring an action plan for improving leadership skills and helping develop engaged, experienced managers is a task that often gets overlooked in the busy day-to-day bustle of running a small business.
It’s critical, however, that organizations encourage their leaders of today and their managers of tomorrow to keep learning and developing interpersonal sales and management skills that can take teams to the next level.
The Tripp County Office of Development is pleased to welcome Duane Salonen and the Dale Carnegie Leadership Development team back to Winner for a 32-hour course that emphasizes ways we can maximize teamwork, leadership and salesmanship attributes in our leaders of the future.
Participants will learn how to
• eliminate the “us vs. them” attitude and increase trust
• encourage intelligent risk to push the performance envelope
• increase the flow of bottom-up ideas by giving every employee the confidence to contribute
• replace conflict with teamwork
• speed up the change process and make people more open to new ideas
• gain buy-in for a vision of the future and the strategies & tactics to get there
The revolutionary Dale Carnegie Course® approach uses team dynamics and intra-group activities to help people master the capabilities demanded in today’s tough business environment. Graduates are able to perform as persuasive communicators, creative problem solvers and focused leaders. What’s more, people develop a take-charge attitude that allows them to initiate with confidence and enthusiasm.
Don’t pass up this opportunity to invest in your management team and help deliver peak performance.
The course will be held January 6, 13, 20 and 27, 2010 at the Holiday Inn Express in Winner. For more information or to register, contact the Tripp County Office of Development at 842-1551 or email develop@winnersd.org.
It’s critical, however, that organizations encourage their leaders of today and their managers of tomorrow to keep learning and developing interpersonal sales and management skills that can take teams to the next level.
The Tripp County Office of Development is pleased to welcome Duane Salonen and the Dale Carnegie Leadership Development team back to Winner for a 32-hour course that emphasizes ways we can maximize teamwork, leadership and salesmanship attributes in our leaders of the future.
Participants will learn how to
• eliminate the “us vs. them” attitude and increase trust
• encourage intelligent risk to push the performance envelope
• increase the flow of bottom-up ideas by giving every employee the confidence to contribute
• replace conflict with teamwork
• speed up the change process and make people more open to new ideas
• gain buy-in for a vision of the future and the strategies & tactics to get there
The revolutionary Dale Carnegie Course® approach uses team dynamics and intra-group activities to help people master the capabilities demanded in today’s tough business environment. Graduates are able to perform as persuasive communicators, creative problem solvers and focused leaders. What’s more, people develop a take-charge attitude that allows them to initiate with confidence and enthusiasm.
Don’t pass up this opportunity to invest in your management team and help deliver peak performance.
The course will be held January 6, 13, 20 and 27, 2010 at the Holiday Inn Express in Winner. For more information or to register, contact the Tripp County Office of Development at 842-1551 or email develop@winnersd.org.
Friday, October 22, 2010
Courting Customers Online
A cool article from the Rapid City Journal about how small businesses are using social media and online notifications to attract customers:
More businesses court customers online
Bully Blends Coffee and Tea Shop sends its online audience daily “blasts” about specials such as ham and bean soup, beef brisket ciabatta and vegan minestrone.
The 756 Facebook fans and 129 Twitter followers of the business receive menu updates every morning, which turns them into customers for lunch and dinner, according to Aida Compton, owner of Bully Blends.
“We have some particular lunch menus that are very popular, some soup,” Compton said. “When we post that we have that soup that day, people come in because they know.”
The daily promotion on social network sites creates a good problem for the business — especially on the soup-plus-cornbread days. The cooks can’t make enough, regardless of the size of pot they use, Compton said.
As online consumption becomes increasingly portable, businesses are moving away from the personal computer model of getting the word out about their business and toward a presence on smart phones.
Compton said making Bully Blends’ business more mobile is something that interests her and her husband, along with helping the restaurant become easier to find on pocket-friendly devices.
The National Retail Federation estimates that by 2015, shoppers worldwide are expected to use their mobile phones to buy goods and services worth about $120 billion, amounting to 8 percent of the total e-commerce market.
Many national companies already are cashing in on the mobile retailing concept: Target and Wal-Mart, for instance, both have mobile sites. But what about small mom-and-pop shops? Mobile phones have provided retailers with an easy, affordable way to reach new and existing customers.
Could Bully Blends customers buy their coffee and tea products from their phones, or is mobile retailing beyond their capabilities?
Mobile sales are possible, according Scott Meyer, co-founder of 9 Clouds in Sioux Falls. Meyer said he expects to start seeing more of the smaller, mom-and-pop shops set up mobile retail shops within two years to allow for actual purchases, starting first with companies that are working with national brands.
The great thing is that small-town shops with mobile technology can suddenly compete much better with national companies, Meyer said.
That doesn’t necessarily mean creating a retail application or a mobile website. In many ways, social networking and texting is a great way to slowly step into the mobile retailing landscape, and Meyer already is seeing that in Sioux Falls.
For instance, Sanaa’s 8th Street Gourmet restaurant in Sioux Falls recently started using Foursquare, a smart-phone application, to attract customers, and Nick’s Hamburger Shop in Brookings has had success in text-messaging coupons to customers.
In Rapid City, Acme Bicycles has an online Twitter and Facebook presence, and owner Tim Rangitsch plans to ramp it up this fall to increase his interaction with customers.
He also would be interested in increasing his business’ presence in the mobile world, and said GPS devices are already sending tourists to his shop.
“I do see the importance of wrangling it for the business, and I can get out more information,” Rangitsch said.
A mobile presence would simply be another way Acme Bicycles could connect nationally with mountain biking enthusiasts, encouraging them to come to the Black Hills, Rangitsch said.
Meyer said some business owners still are hesitant to use the Web to market and sell their merchandise, partly because there is so much new technology out there.
But it holds a lot of potential, particularly in catching members of the younger generation, he said.
It will be some years before mobile sales really take off with smaller companies in South Dakota. But it seems inevitable that customers someday will expect it.
Contact Holly Meyer at 394-8421 or holly.meyer@rapidcityjournal.com. Sioux Falls Argus Leader reporter Kelly Thurman contributed to this story.
http://www.rapidcityjournal.com/business/article_af4d7c6e-dd4f-11df-9640-001cc4c002e0.html
More businesses court customers online
Bully Blends Coffee and Tea Shop sends its online audience daily “blasts” about specials such as ham and bean soup, beef brisket ciabatta and vegan minestrone.
The 756 Facebook fans and 129 Twitter followers of the business receive menu updates every morning, which turns them into customers for lunch and dinner, according to Aida Compton, owner of Bully Blends.
“We have some particular lunch menus that are very popular, some soup,” Compton said. “When we post that we have that soup that day, people come in because they know.”
The daily promotion on social network sites creates a good problem for the business — especially on the soup-plus-cornbread days. The cooks can’t make enough, regardless of the size of pot they use, Compton said.
As online consumption becomes increasingly portable, businesses are moving away from the personal computer model of getting the word out about their business and toward a presence on smart phones.
Compton said making Bully Blends’ business more mobile is something that interests her and her husband, along with helping the restaurant become easier to find on pocket-friendly devices.
The National Retail Federation estimates that by 2015, shoppers worldwide are expected to use their mobile phones to buy goods and services worth about $120 billion, amounting to 8 percent of the total e-commerce market.
Many national companies already are cashing in on the mobile retailing concept: Target and Wal-Mart, for instance, both have mobile sites. But what about small mom-and-pop shops? Mobile phones have provided retailers with an easy, affordable way to reach new and existing customers.
Could Bully Blends customers buy their coffee and tea products from their phones, or is mobile retailing beyond their capabilities?
Mobile sales are possible, according Scott Meyer, co-founder of 9 Clouds in Sioux Falls. Meyer said he expects to start seeing more of the smaller, mom-and-pop shops set up mobile retail shops within two years to allow for actual purchases, starting first with companies that are working with national brands.
The great thing is that small-town shops with mobile technology can suddenly compete much better with national companies, Meyer said.
That doesn’t necessarily mean creating a retail application or a mobile website. In many ways, social networking and texting is a great way to slowly step into the mobile retailing landscape, and Meyer already is seeing that in Sioux Falls.
For instance, Sanaa’s 8th Street Gourmet restaurant in Sioux Falls recently started using Foursquare, a smart-phone application, to attract customers, and Nick’s Hamburger Shop in Brookings has had success in text-messaging coupons to customers.
In Rapid City, Acme Bicycles has an online Twitter and Facebook presence, and owner Tim Rangitsch plans to ramp it up this fall to increase his interaction with customers.
He also would be interested in increasing his business’ presence in the mobile world, and said GPS devices are already sending tourists to his shop.
“I do see the importance of wrangling it for the business, and I can get out more information,” Rangitsch said.
A mobile presence would simply be another way Acme Bicycles could connect nationally with mountain biking enthusiasts, encouraging them to come to the Black Hills, Rangitsch said.
Meyer said some business owners still are hesitant to use the Web to market and sell their merchandise, partly because there is so much new technology out there.
But it holds a lot of potential, particularly in catching members of the younger generation, he said.
It will be some years before mobile sales really take off with smaller companies in South Dakota. But it seems inevitable that customers someday will expect it.
Contact Holly Meyer at 394-8421 or holly.meyer@rapidcityjournal.com. Sioux Falls Argus Leader reporter Kelly Thurman contributed to this story.
http://www.rapidcityjournal.com/business/article_af4d7c6e-dd4f-11df-9640-001cc4c002e0.html
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