Bank of North Dakota announces loan program changes

Enhancing business diversification efforts and addressing financing gaps in economic development programming were key issues identified in a series of 40 meetings with business and finance leaders, economic development professionals and elected officials across the state in 2016. The outcome of these meetings combined with additional research by Bank of North Dakota (BND) has resulted in a recommendation to the Industrial Commission to enhance four existing BND programs and implement a new program to assist fast growing companies in North Dakota.

“Economic diversification is a top priority for North Dakota,” said Gov. Doug Burgum. “It will require a statewide focus and Bank of North Dakota is an example of a public-private partnership that leverages business and state funding options to create opportunity for our residents. These programs will allow BND to deliver on its mission of being an agile financial partner, to enhance our competitive advantage and think outside the box to deliver on new business funding concepts.”

A key addition to the BND loan portfolio is the development of an Accelerated Growth Loan Program. This program will assist North Dakota-based companies with a record of proven operations, experienced management and the ability to generate cash flow when they have limited assets for traditional bank financing. Loan proceeds can finance the acquisition of real property, remodel or expand an owner-occupied business, purchase or lease equipment, provide working capital or refinance a portion of existing loans. Technology-based companies are a good example of entities that could use this program. Like all BND business loan programs, it is made in partnership with local lenders. The business owner should visit first with their local lender to determine qualifications.

The parameters of four existing programs — the Beginning Entrepreneur, PACE, Flex PACE and Venture Capital Fund — were also amended to meet the needs of North Dakota’s changing economy. The Beginning Entrepreneur Loan Guarantee limit and maximum net worth requirements increased to $500,000 from $200,000. This program provides beginning entrepreneurs and small businesses access to funding backed by BND. The intent is to provide local financial institutions with opportunities to grow small businesses in their communities.

The final two programs, PACE and Flex PACE, have been popular business development programs in North Dakota for almost two decades. These programs support economic development initiatives to diversify and expand the economy based on priorities determined by a local community. Eligibility guidelines now align with other economic development programs in the state and meet the definition of a primary sector business as defined by the Legislature. To be eligible for PACE, the borrower must be certified as a primary sector business by the North Dakota Department of Commerce. (As defined by NDCC 1-01-49.)

BND is expanding its PACE buydown parameters to include total project investment as a qualifying criterion for an interest rate reduction on a loan and increased the maximum buydown to $500,000. The ultimate decision on how much to invest is decided by the local community. A community must invest a portion of its local economic development dollars to match the BND buydown.

Flex PACE is for projects that do not meet the requirements of the primary sector definition. The maximum Flex PACE buydown for a local business increased to $200,000 from $100,000. The maximum buydown limit for a daycare facility remains at $300,000 and affordable housing projects at $500,000.

BND is enhancing support of entrepreneurs and early stage startup companies through its New Venture Capital Fund. There will be a new emphasis to invest in pre-revenue companies, support local community efforts to provide seed capital and enhance public-private partnerships to stimulate early stage investing in North Dakota companies.

BND is the only state-owned bank in the nation and is able to modify current loan programs and create new programs to benefit the state of North Dakota. As a partner with financial institutions across the state, BND seeks to create economic development opportunities for a variety of industries.