The best business debt settlement companies South Dakota business owners can hire are not going to try to use usury as a weapon against your funders, because South Dakota generally has no usury cap when the parties set the interest by written agreement (SDCL 54-3-1.1). Your MCA settlement provider should instead work the South Dakota exemptions: an acre-based homestead exemption, generous wage and retirement exemptions, no prejudgment garnishment, and short deadlines on out-of-state judgments.
Why doesn't the usury argument work in South Dakota?
Under SDCL 54-3-1.1, there is no maximum interest rate or usury restriction between persons, corporations, limited liability companies or other entities that establish the rate by written agreement. Agreements made electronically also count.
South Dakota does have a 36% cap on interest in loans from licensed lenders (Initiated Measure 21 of 2016, codified at SDCL 54-4-44). A loan that violates the cap is void and cannot be collected. But South Dakota has an exception for business-to-business loans of $5,000 or more to a borrower with a federal employer identification number (SDCL 54-4-44.4). So even if a court treated the MCA as a loan, the cap wouldn't apply. See our discussion of whether a merchant cash advance can be usurious.
Can an MCA funder take my house in South Dakota if I put up a personal guarantee?
Your homestead is generally well-protected. A resident family's homestead "is exempt from judicial sale, from judgment lien, and from all mesne or final process from any court" (SDCL 43-31-1), and the statute says the homestead is "absolutely exempt" (SDCL 43-45-3(1)). The homestead can be up to one acre if within a town plat or 160 acres if not (SDCL 43-31-4).
If you use a shop, store, or other building on the land in your own ordinary business, that building may be deemed appurtenant to the homestead (SDCL 43-31-2). This helps mechanics or contractors whose shop sits on the home parcel. The proceeds from a sale of the homestead up to $100,000 are also exempt for one year after receipt (SL 2025 ch. 185, signed March 17, 2025, raising the amount from $60,000).
But note that a creditor who believes the homestead is worth more than the exemption amount can file an affidavit to that effect and then levy on the excess (SDCL 21-19-2). How that squares with "absolutely exempt" is a question for a South Dakota lawyer if your home has significant equity.
What other property is exempt in South Dakota?
Other exemptions that help protect a personal guarantor include:
- Retirement accounts, including 401(k)s and IRAs, up to $1,000,000, which a court can reduce if excessive (SDCL 43-45-16 to 43-45-18).
- Selected personal property (including money) up to $7,000 for the head of a family or $5,000 for anyone else (SDCL 43-45-4).
- Wages, where garnishment is limited to the lesser of 20% of disposable earnings or the amount by which disposable earnings exceed 40 times the minimum hourly wage, minus $25 per week for each dependent in the household (SDCL 21-18-51).
Exemptions must be claimed within 5 days of notice of levy (or 8 days if the notice was given by registered or certified mail) under SDCL 21-19-9.
How does a New York judgment reach an owner in Sioux Falls or Rapid City?
The funder must file an authenticated copy of the judgment with the clerk of a South Dakota circuit court. The foreign judgment then has the same effect as a local judgment and is subject to the same defenses and motions to reopen, vacate or stay (SDCL 15-16A-2). The creditor files an affidavit with your address, and the clerk mails you notice. In Sioux Falls, the funder files in the Second Judicial Circuit, located in the Minnehaha County Courthouse, 425 N. Dakota Ave., Sioux Falls, SD 57104. In Rapid City, it files in the Seventh Judicial Circuit, which serves Pennington County.
Judgments docketed in South Dakota operate as a lien on all real estate, except a homestead, in the county where the judgment is docketed (SDCL 15-16-7). So a judgment docketed in Minnehaha County is not a lien on your real estate in Pennington County until the funder dockets it there.
How do I vet a South Dakota business debt settlement company?
You will have to do your own vetting, because South Dakota has no a state commercial financing disclosure law, according to Venable's March 2026 survey. The Division of Banking offers no license for debt settlement or commercial financing. The FTC prohibits advance fees for consumer debt settlement under the Telemarketing Sales Rule, but B2B calls are exempt from the rule except for the misrepresentation provisions. So no federal law prohibits a provider from charging you in advance.
Ask if they can negotiate before the funder domesticates the judgment. If they cannot, ask who will file an exemption claim within five days of a levy notice. Ask if a member of the State Bar of South Dakota will review your homestead. Check the company with the Secretary of State, get an engagement letter with the fees, and read our article on how much business debt settlement costs.
Frequently Asked Questions
Can a funder freeze my South Dakota bank account before it wins in court?
Under SDCL 21-18-3.1, they cannot garnish your account before they get a final judgment in the main case. The daily debits under the contract you signed are a separate issue. Once they get a judgment, they can serve the bank as a garnishee. You can apply for a partial release of the garnished funds under SDCL 21-18-23.
Will the 36% interest rate cap in South Dakota protect my business?
It will almost never protect your business, because the cap at SDCL 54-4-44 applies to licensed money lenders, and B2B loans of $5,000 or more to a borrower with a federal EIN are exempt from the cap under SDCL 54-4-44.4. Most merchant cash advances and small business credit fall under this exemption.
How long can a judgment follow me in South Dakota?
The creditor has 20 years to bring an action on a judgment in South Dakota under SDCL 15-2-6. The judgment lien lasts ten years on non-homestead real estate, and the lien can be renewed by the filing of an affidavit. The judgment also accrues interest at 10% per year.
Should I move my property or money before they get a judgment?
Speak with a South Dakota lawyer first, because under SDCL 43-45-7, all exemptions other than absolute exemptions are not available to a debtor who is in the act of removing from this state.