PIERRE, S.D. (KELO) — State government’s new program providing emergency loans to South Dakota businesses that have been financially hurt by COVID-19 is quickly using up its $10.5 million, according to a state official.
The Legislature, at Governor Kristi Noem’s request, gathered cash available in other state lending programs and approved the disaster loan fund March 30.
The governor signed SB 192 into law the next day. It gives authority to the Governor’s Office of Economic Development to decide which businesses get the loans.
The first loans were approved April 10, when most of state government was on Good Friday administrative leave, according to Mary Lehecka Nelson. She is GOED’s deputy commissioner.
Through the close of business Wednesday, the office had received 205 applications, Lehecka Nelson said, and as of Thursday morning, 64 loans had been approved totaling nearly $3.5 million.
Said Lehecka Nelson, “The biggest criteria is that the business adequately describes the impact that the COVID-19 pandemic is having on their business, and that the business can show that they could cash flow the new debt under normal circumstances.”
Some loans are being funded each day, she said. “We don’t have a goal for a number of loans, but we want to help as many small businesses as possible with the funds. We do anticipate the funding to run out before a special session is called.”
The governor hasn’t publicly announced a date yet for the special legislative session, but she has said several times it probably would come in June. State government’s current fiscal year ends June 30 and the 2021 budget starts July 1.
Noem told reporters Thursday that her executive team — chief of staff Tony Venhuizen, finance commissioner Liza Clark, legal counsel Tom Hart, economic development commissioner Steve Westra and policy director Maggie Seidel — each day goes through applications that have been vetted by the economic development office.
“We’re getting hundreds of applications, and approving those, so we can get the money turned around as quickly as possible,” Noem said. “There is resources there. I would encourage you that if you are a small business in South Dakota that’s struggling, to pay your utility bill, to keep your doors open, to pay rent, and you have a model that shows that the virus has definitely impacted your business, please reach out to us.
“There is resources there. We will help you get through this situation, to make sure you have an opportunity to stay in business, keep your employees employed, and continue to make South Dakota your home and pursue your dreams.
“That really is why that fund was put there. It is going out, and all of that is something incredibly important for folks to know, that there is a light at the end of the tunnel. We also have information for the Small Business Administration loans, so people are worried and wondering about that, we can help them coordinate that,” Noem said.
She explained one of the reasons the Legislature set up the disaster loan program was to get money out “as soon as possible” to those businesses suffering. She acknowledged the federal SBA loans and Payroll Protection Program funds might not have enough money. (PPP was already loaned out.)
“It’s small dollar amounts,” Noem said about the state program. It works in $5,000 increments up to a maximum $75,000. “So it’s not a huge loan, but it is something that can be helpful to paying bills to get through a couple of months, to get you back on line and making sure that you’re cash flowing.”
Noem told KELOLAND News that the program is using some of the SBA guidelines and some other elements such as the background of a business.
“We want to be making sure this is a viable business and that it is something that was successful. They have to show that they were impacted by the virus, so the date of when they saw a downturn in revenue is important, that they show this virus came in, pulled the rug out from underneath them, and that they can rebound to when we come through this situation,” she said.