Beginning Entrepreneur Loan Guarantee
The Beginning Entrepreneur Loan Guarantee Program assists with business startup financing by providing financial institutions with guaranty of a loan not to exceed $500,000. It may be used in conjunction with other BND programs.
Lead lender: Any lending institution that is related or funded under the laws of North Dakota or the United States. The lead lender is responsible for submitting the Beginning Entrepreneur Loan Guarantee Program history form to BND.
Borrower: A North Dakota resident who graduated from high school or received a general equivalency certificate, has some training by education or experience in the type of revenue producing enterprise for which they are seeking a loan. Borrower’s net worth must be less than $500,000.
Proceeds may be used to finance:
- Purchase or improvements of real property, equipment or personal property,
- Working capital needs
- Child care home, group or center licensed by the Department of Human Services.
- Business startup expenses including accounting, legal and business planning
- Refinance or consolidate debt provided the amount of the refinance or consolidation does not exceed 20 percent of the total loan to be guaranteed
- BND may approve a guarantee on a loan up to $5,000 to a beginning entrepreneur for business startup expenses including accounting, legal and business planning. The Bank may approve a guarantee on a loan up to $25,000 without requiring collateral for the loan.
The loan guaranty is based on this schedule:
|Maximum loan amount||Maximum guaranty percentage|
|Up to $150,000||85%|
|$150,001 – $300,000||75%|
|$300,001 – $500,000||50%|
Interest: The originating lender must charge an interest rate acceptable to BND. At the discretion of the lead bank with BND consent, a beginning entrepreneur may receive a one-year period of interest only payments at the beginning term of the loan.
Fees: The guarantee fee is 0.50 percent per year on a BND commitment of less than five years or a one-time fee of 2 percent of the guaranteed portion for a full five-year guarantee commitment. The guarantee fee may be included in the loan or in the rate charged by the lender.
This program can be used in conjunction with other BND loan programs.
Lead lender establishes credit criteria.
The term of the BND guaranty may not exceed five years. The term of the loan period is at the lead bank’s discretion.
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