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Direct Financial Incentives

The Bank of North Dakota (BND) operates a business development loan program that may provide up to $500,000 in loan proceeds per borrower. The program requires a minimum of 30 percent participation from another financial institution that will originate and service the loan. The interest rate is tied to the BND base rate.

BND also participates in the Partnership in Assisting Community Expansion (PACE) Program, an interest buy-down program with state, local lender, and community participation. The program uses monies set aside in the PACE fund with local monies to reduce the interest rate on loans by as much as 5 percent below the note rate (floor of 1 percent or 5 percent below WSJ Prime which is greater). The borrower must create 1 job for every $75,000 of loan proceeds. The funds are targeted for manufacturing, processing, value-added processing, and targeted service industries. Targeted service industries are businesses involved in data processing, telemarketing, telecommunications, major tourist attractions, holding companies involved in leasing assets to entities otherwise defined as PACE business, and all other service companies and wholesalers that generate 75 percent or more of their sales outside the state of North Dakota.

The MATCH program provides long-term, fixed-rate financing for companies with a long term bond rating of "A" or better from a national rating agency. The interest rate is set at an equivalent term U.S. Treasury note plus .25 to .50 percent. The funds are targeted for businesses that provide a major economic benefit to the state.

The state-sponsored Development Fund provides gap financing assistance to primary sector businesses through loans and equity.

The FLEX PACE program will provide interest buy-down to non-PACE qualifying businesses where the community determines eligibility and accountability standards. FLEX PACE will allow communities the ability to provide assistance to businesses that would not meet the current requirements of PACE such as: jobs retention, technology creation with no new jobs, retail, smaller tourist businesses and essential community businesses. Jobs creation will not be a requirement of FLEX PACE, but jobs will be tracked for informational purposes. BND will designate set aside money from the the existing PACE funds for FLEX PACE, but this designation is not an exclusive reservation of the funds and therefore will be available for other PACE eligible projects. Each community is capped at $150,000 of PACE funds per biennium under FLEX PACE. Existing PACE program parameters (e.g., interest rate buy-down maximum, community match, BND participation amount, default) will apply.

Biofuels PACE (Biofuels Partnership in Assisting Community Expansion) was established to buy down the interest rate on loans to biodiesel and ethanol production facilities, livestock operations, biofuels retailers, and grain handling facilities.

Ethanol Production Criteria: Production facility must be located in North Dakota; facility must produce agriculturally derived denatured ethanol; fuel must be suitable for blending with a petroleum product for use in internal combustion engines; ownership must consist of Ag producers who hold at least 10 percent interest in the facility; residents of North Dakota must own at least 50 percent of the company; project maximum: $500,000 of interest buy down; loan terms: 7 to 12 years; equity: 40 percent to 50 percent.

Biodiesel Production Criteria: Production facility must be located in North Dakota; facility must produce biodegradable, combustible liquid fuel derived from vegetable oil or animal fat; fuel must be suitable for blending with diesel fuel for use in internal combustion diesel engines; ownership must consist of Ag producers must hold at least 10 percent interest in facility and residents; North Dakota must own at least 50 percent; project maximum: $500,000 of interest buy down; loan terms: 7 to 12 years; equity: 40 percent to 50 percent.

Livestock Operations Criteria: Livestock operations located in North Dakota that feed, handle, milk, or hold livestock with these operations using as part of its operation a byproduct produced at a biodiesel or an ethanol production facility’ eligible uses are for the purchase or construction of real property, expansion of facilities, and purchase or installation of equipment; project maximum: $250,000 of interest buy down to any single livestock operation’ loan terms: 5 to 15 years; equity: 40 percent.

Retailer Pumps Criteria: Pumps must be installed by a North Dakota biofuels retailer; the retailer must dispense and distribute biodiesel blends with a minimum of 5 percent biodiesel or gasoline blends with greater than 60 percent ethanol’ project maximum: $10,000 of interest buy down to any single location of a biofuels retailer; loan terms: 5 to 7 years; equity: 25 percent.

Grain Handling Facilities: Grain handling facilities located in North Dakota and licensed to do business in North Dakota which provide condominium storage of grain that is principally intended for the production of biofuels’ eligible uses are for the purchase or construction of real property expansion of facilities and purchase or installation of equipment; project maximum: $50,000 of interest buy down to a grain handling facility; loan terms: 5 to 10 years; equity: 25 percent to 40 percent.

Other Biofels PACE Parameters: Recipients of Biofuels PACE are not eligible for regular PACE funds’ interest buy down of 5.0 percent below the note rate; community match required; existing PACE Program parameters (ex.: interest rate buy down maximum, BND's participation amounts, default) will apply to Biofuels PACE; loan funds may not be used to refinance any existing debt or for relocation within the state. A maximum of $4.5 million of the $5 million PACE program will fund ethanol production, biodiesel production, feedlot operations and dairy operations. The remaining dollars will be fund projects related to retailer pumps and condo grain storage for a total of $250,000 each.

Customized industrial training:
The Specialized Job Training Program custom-trains people for the specific needs of new and expanding industries. The state assists firms in recruiting, screening, and testing potential trainees.

North Dakota offers a New Jobs Training Program for new or expanding businesses. Qualifying businesses can obtain loans that are repaid through state income tax withholding credits. State income tax on wages paid normally goes into the state's general fund. In this instance, the income tax revenue is used to pay off the loan instead. In practice, the training is at no cost to the business, since the revenue comes from individual state income taxes that would have to be paid.

Workforce 20/20 is a state funded program that provides direct grants to employers for training, retraining, and upgrade training. The program is administered through Job Service North Dakota and requires a match from the employer.