The Match Program provides low interest rates to encourage and attract financially strong companies to North Dakota.
Businesses that create new wealth for North Dakota and provide new jobs outside of the retail sector, especially in manufacturing, processing and value-added industries, are primary candidates. These companies shall provide evidence of considerable financial strength as demonstrated by a long-term investment grade rating. If a company does not have an adequate rating, it has three options to meet this requirement:
- Credit enhancement by a financial institution. The bank or credit union can provide a letter of credit acceptable to BND or pledge Fed Book entry securities.
- Guarantee from a federal guaranty agency or another company with an investment grade rating
- Pledge a certificate of deposit or marketable securities of a quality and level satisfactory to BND
This enhancement must provide 100 percent of BND’s portion of the loan.
Proceeds may finance real estate, term working capital, purchase or lease equipment
BND will determine the maximum loan amount based upon funding availability and loan demand at the time of the loan application.
Interest rate: Interest rate on BND’s portion of the loan is 0.25% over the 1- to 5- year US Treasury Yield Rate with a 2% floor. The interest rate may be adjusted periodically throughout the term of the loan depending upon the conditions of the MATCH funding and the ability of the borrower to maintain its long-term credit rating. The interest rate may reset at 1- to 5-year re-pricing windows consistent with the loan pricing options and may be subject to a prepayment penalty satisfactory to BND.
The borrower must provide evidence each year that the company’s long term rating has remained at the investment grade level. Should the rating fall below investment grade, the interest rate on the note will be adjusted to reflect the market rate for the subsequent rating.
Fees: The lead financial institution may charge an origination fee up to 1% of the total loan amount. BND will share in a portion of the origination fee.
BND requires first lien position on real estate, equipment and other security as may be appropriate. A corporate guarantee may be necessary if the borrower is a subsidiary and cannot meet the financial strength requirements on a stand-alone basis.
The promissory note will require equal principal payments over the life of the loan. For example, a $10 million note with a 10 year final maturity will require equal annual principal payments of $1 million plus accrued interest.
The term of the loan will vary depending on loan purpose with a maximum of 15 years.