Business Development Loan Program
The Business Development Loan Program assists new and existing businesses to obtain loans that have a higher degree of risk than would normally be acceptable to a lending institution. It may be used to start or expand a new business or for refinancing.
The business must be located in North Dakota. The financial condition or the nature of the industry must lead to a higher credit risk than would normally be acceptable to a lending institution.
Proceeds shall be used to:
- Establish or purchase a new or existing business
- Finance the acquisition of real property
- Remodel or expand an existing business
- Purchase or lease equipment
- Provide working capital
- Refinance an existing loan
BND’s maximum loan participation is $1,000,000.
Lead lender: Interest rate must be acceptable to BND.
BND: Variable rate is 0.50% below Prime, adjusted monthly or quarterly. Fixed rate is 2.25% above the Federal Home Loan Bank of Des Moines Advance Rate with a rate lock not to exceed five years.
Fees: An origination fee of up to 1 percent of the total loan may be charged and is shared with BND.
Equity requirements are evaluated on a case by case basis. A personal guarantee is required.
Adequate collateral is required and must be of such a nature that repayment of the loan can be reasonably expected. Security for the loan is evaluated on a loan-by-loan basis. Examples of acceptable security are:
- Accounts receivable
- Assignment of leases
- Assignment of life insurance
- Leasehold improvements
- Letters of credit, a guarantee from SBA, USDA Rural Development or other government source real estate
A lead lender is required. BND’s participation percentage is negotiated on a loan-by-loan basis. In most cases, BND will consider a participation of 50 percent to 70 percent of the loan.
Repayment terms vary depending upon the use of proceeds.
- Real estate: 12-20 years
- Equipment: 5-7 years
- Working capital: 1-5 years