The MATCH program is designed to encourage and attract financially strong companies to North Dakota. Through this program, BND will participate in loans to financially strong companies and provide interest rates at some of the lowest in the nation. The maximum loan award is $10 million; there is no minimum award.

The borrower must provide evidence of considerable financial strength, as demonstrated by a long-term credit rating in the “A” category from a national rating agency. If the company does not have a rating or chooses not to obtain such a rating the following substitutions may be made: 1) credit enhancement by a financial institution, 2) guarantee from a federal guaranty agency or another company with a long term rating in the “A” category from a nationally recognized rating agency, and 3) the company may pledge a certificate of deposit or marketable securities of a quality and level satisfactory to BND. If the company’s rating is down-graded to below the upper medium grade, the rate of the loan will increase to a market rate. In addition, financial institutions which do not have an “A” rating but have an established Fed Funds borrowing line at BND can provide the letter of credit on behalf of the borrower. The letter of credit shall provide 100 percent coverage for BND’s portion of the loan and cannot exceed 50 percent of the Fed Funds line.

Loan funds may be used to finance real estate, machinery and equipment and for the purchase or leasing of equipment.

The MATCH program requires the participation of a lead lender. BND’s portion of the loan is available at an interest rate equal to an equivalent term U.S. Treasury Note rate plus 0.25 percent – 0.50 percent for all borrowers that have an “A” rating. 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 “A” rating.

If the Fed Funds line formula is used by a financial institution providing a letter of credit, the rate that BND will net is equal to an equivalent term U.S. Treasury Note rate plus 0.50 percent – 0.75 percent. The term of the loan will vary depending on the loan purpose with a maximum of 15 years.

The PACE Fund is designed to assist North Dakota communities in expanding their economic base by providing for new job development. The program has two major elements: (1) the participation by BND with a local lender in a community based loan and (2) the participation by BND with the community, in the form of the Growth Initiative Fund, in reducing the borrower’s overall interest rate.

To participate in the PACE program, a primary sector business must first apply, and qualify, for a bank loan. The Bank of North Dakota then matches the loan amount with a loan of its own. The total loan may be used for the purchase of real property, equipment and certain working capital needs. The amount of the loan is dependent upon job creation; for every $100,000 of loan proceeds, the qualifying company must create and retain a minimum of one full-time job within the first year of securing the loan.

The second element of the PACE loan combines the resources of the local community and BND in buying down the interest rate on the loan. BND provides 65 percent of the buy-down, up to $300,000, which is limited to the amount required to buy down the interest up to 5 percent below yield rate, with a floor of 1 percent. The BND portion is a grant that does not require repayment. The community, in the form of a revolving loan fund called the Growth Initiative Fund (GIF), supplies the other 35 percent of the buy-down in the form of a loan that does not accrue interest or begin repayment while the buy-down period is in effect.

The Flex PACE program operates under the same structure as the PACE program, but has no job creation requirements. Businesses are capped at $200,000 per biennium.

The New Venture Capital Fund provides flexible financing through debt and equity investments for new or expanding businesses. The program may fund many types of early-stage companies, including those operating in North Dakota’s target industries, and that:

• are raising or have raised adequate capital to support operating activities
• can demonstrate clear proof of completed product development, a market with favorable size, growth and competitive characteristics, and market acceptance as evidenced by growing sales
• are led by an experienced and successful management team predisposed to communicate and work closely with outside investors toward common goals.
  The fund also invests in growth and later-stage manufacturing, and services.

The Flex PACE Fund is designed to assist North Dakota communities in expanding their economic base by providing for new job development. The program has two major elements: (1) the participation by BND with a local lender in a community based loan and (2) the participation by BND with the community, in the form of the Growth Initiative Fund, in reducing the borrower’s overall interest rate. The Flex PACE program operates under the same structure as the PACE program, but has no job creation requirements.

To participate in the PACE program, a primary sector business must first apply, and qualify, for a bank loan. The Bank of North Dakota then matches the loan amount with a loan of its own. The total loan may be used for the purchase of real property, equipment and certain working capital needs.

The second element of the PACE loan combines the resources of the local community and BND in buying down the interest rate on the loan. BND provides 65 percent of the buy-down, up to $300,000, which is limited to the amount required to buy down the interest up to 5 percent below yield rate, with a floor of 1 percent. The BND portion is a grant that does not require repayment. The community, in the form of a revolving loan fund called the Growth Initiative Fund (GIF), supplies the other 35 percent of the buy-down in the form of a loan that does not accrue interest or begin repayment while the buy-down period is in effect.

Businesses are capped at $200,000 per biennium.

Biofuels PACE

The Business Development Loan Program is designed to assist new and existing businesses in obtaining loans that would have a higher degree of risk than would normally be acceptable to a lending institution. The borrower must be a North Dakota business in an industry that reflects a higher degree of credit risk than would normally be acceptable by a lending institution.

Loan proceeds may 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 or refinance an existing loan.

BND’s participation percentage is negotiated on a case-by-case basis but may not surpass ten percent of the total loan amount and is capped at $500,000. The interest rate charged at the time of funding by the lead lender may not exceed 3 percent above BND’s Base Rate. There is a variable rate and a fixed rate option. An origination fee of up to 1 percent of the total loan may be charged and is shared with BND.

The repayment terms vary according to the use of the proceeds, with a general guideline of 12-15 years for real estate, five to seven years for equipment and three to five years for working capital.

The Envest program requires the participation of a lead lender, and provides up to 70 percent of the total loan amount. Envest proceeds are used for the purchase of shares in start-up or expansion of agricultural processing operations that intend to process North Dakota-grown products. It is desirable, but not necessary, that the facility be located in North Dakota. The borrower must be a North Dakota resident, must own no more than 25 percent of the project, and must meet the bank’s standard credit criteria.

The BND portion of the loan is borrowed at a floating rate equal to BND’s base rate less one percent. The lead lender’s interest rate may not exceed BND’s base rate plus three percent. The terms of the loan are five to seven years, and the borrower has the opportunity to defer principal payments for the first two years.

The Industrial Loan Fund is West Central Initiative’s fund for larger loans of between $20,000 and $300,000. Loans from this fund are often offered at a rate below the market rate and are typically used to fund new construction of a building or the purchase of equipment or existing real estate, and in some cases may be used for working capital or other intangible uses. The loan must always be collateralized and will require a personal guarantee if the borrower is a corporation.

The Small Enterprise Loan Fund (SELF) is West Central Initiative’s fund for small loans of $1,000-$35,000. It is used to fund fixed assets and working capital for small local businesses, startups and some retail businesses.