Bank Participation Loan Program
BND assists a financial institution with a borrower whose financing needs have outgrown the legal lending or exposures limits of the originating lender. Loans must serve the legitimate credit needs of the state and are made on a sound and collectible basis.
A North Dakota business
A broad range of uses will be considered. Desirable loans include, but are not limited to:
- Business and industrial acquisitions
- Construction, conversion, expansion, repair and modernization
- Purchase of land, buildings and equipment acquisition, repair and modernization
- Start-up and working capital
- Refinancing an existing loan
- Any reasonable business purpose
Rates, terms and conditions offered to the borrower are “market driven.” Such factors as risk, liquidity of collateral, equity position, repayment and the term of the loan are considered. Commitment fees, origination fees and service fees may be charged; fees are dependent upon the loan request and will be reviewed on an individual basis.
Loans are reviewed in accordance with BND’s lending policies and sound banking practices including, but not limited to, the intended purpose of the loan, the ability to repay, the business and its management and the feasibility of the project.
Specific equity requirements are not established; each loan is reviewed on its own merits.
Adequate collateral is required. Examples of acceptable collateral include:
- Accounts receivable and inventory for short-term loans
- Equipment which has an established market
- Securities issued by the federal government or its agencies
- Letters of credit from acceptable financial institutions
- A first mortgage on commercial real property
Repayment terms vary depending upon the use of the proceeds and nature of the business. The following maturities serve as a general guideline for loan terms:
- Real estate: 12-20 years
- Equipment: 5-7 years
- Working capital: 3-5 years