PACE Program

The PACE Fund helps communities expand their economic base by assisting Primary Sector businesses that make an investment or create jobs in their community.

The borrower must be a primary sector business as defined by NDCC 1-01-49 and certified by the North Dakota Department of Commerce. A primary sector business is an individual, corporation, limited liability company, partnership or association which through the employment of knowledge or labor adds value to a product, process or service that results in the creation of new wealth.

For purposes of this program, new wealth means revenues generated by a business in North Dakota through the sale of products or services to customers outside of North Dakota or customers in North Dakota if the products or services were previously unavailable or difficult to obtain from a business in the state.

A holding company may qualify if the benefits of the PACE buydown flows through to the lessee. A minimum of 40 percent of the leased space must be used by a PACE-qualified business for the facility to be deemed as PACE-qualified.

Proceeds may be used to purchase real property, equipment and certain working capital requirements. The program cannot be used to refinance any existing debt or for relocation within North Dakota.

There are no maximum loan parameters. See buydown requirements.

A fixed or variable interest rate may be used in the loan participation. The interest rate to the borrower may be as much as 5% below the rate on the promissory note, but not less than 5% below Prime rate with a floor of 1%.

Fees: $250 minimum origination fee

BND uses typical lending credit standards in reviewing the loan which include loan size and type of project.

Adequate collateral is required.

The buydown the borrower is eligible for is based on the total investment OR the number of jobs created. The first three years of job creation will be considered in the allocation. See Buydown requirements for more detail.

BND will evaluate all requests in the same manner as a bank participation. BND’s participation must be 50 percent to 80 percent.

The PACE Fund combines the resources of the local community and the PACE Fund to buy down the interest rate on the loan.

The BND buydown is based on either the total investment OR the number of jobs created. The first three years of job creation will be considered in the allocation. The interest buydown is based on the following matrix:

BND Buydown Minimum investment or Jobs created
Tier One $100,000 $750,000-$1,200,000 2-5
Tier Two $200,000 $1,200,001-$2,200,000 6-10
Tier Three $300,000 $2,200,001-$3,500,000 11-15
Tier Four $400,000 $3,500,001-$4,500,000 16-20
Tier Five $500,000 $4,500,001 + 20+

Full time equivalent employees (FTE’s) work 32 hours per week or greater. The exception is when a single position is filled by two people. In this instance, each person needs to work 20 hours per week or greater to be considered a 0.5 FTE. Please round numbers to the nearest 0.5 FTE.

Community percentage: A community percentage factor has been assigned to the 200 largest communities within the state. This factor determines the amount of the PACE Fund’s participation (65-85 percent) in the funding of the interest rate buydown. It is based on the community’s taxable sales and purchases, employment, taxable valuation and population.

Buydown funding: PACE provides a maximum interest rate buydown up to $500,000 per biennium that is matched by the community.  The maximum buydown through any combination of PACE, Flex PACE and Flex PACE for Affordable Housing is $500,000 per biennium per borrower.

The buydown is matched by the community at the designated participation level listed under Community Percentage Factor. The interest rate to the borrower may be as much as 5% below the rate on the promissory note, but not less than 5% below Prime with a floor of 1%.

Community buydown funding: The funds may come from a local development corporation, contributions, community funds or other community sources in the form of a grant or a loan. The community’s portion of the buydown cannot be funded in any way, directly or indirectly, by the borrower or any individual or organization that has financial interest in the borrower. If the community provides its share of the interest rate buydown as loan, interest may accrue. Repayment of principal or interest on the loan from the community shall not commence until the PACE interest buydown has been fully expended.

Community match requirements: The community may meet its matching requirement through direct cash, loans, equity, investments, land, property or infrastructure, and any combination of these.

Transfer of funds:  An Escrow Agent shall be appointed for the buydown. Both the community and the PACE Fund will make payments to the Escrow Agent to cover the interest rate buydown.

  • Working capital: 1-5 years
  • Equipment: 5-7 years
  • Real estate: Up to 20 years

Bank Participation Loan Application (PDF)
Loan Renewal Application for Existing Participations (PDF)
Community Percentage Factors (PDF)

PDFs will automatically download. Once downloaded, on desktop PC, right-click the file name in browser’s default download location, select “Show in folder,” open PDF. If you are not able to access a PDF, please contact us for assistance.

BND offers this loan by partnering with local lenders. To apply, contact your lender.

If you have any questions, contact us or call 701.328.5795.