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PACE Program - (Partnership in Assisting Community Expansion)
The PACE Fund is designed to assist North Dakota communities in expanding their economic base by providing for new job development.
This program has two major elements: (1) the participation by BND with a local lender in a community based loan, and (2) the participation by the PACE Fund with the local community in reducing the borrower's overall interest rate.
The PACE Program has been expanded to include features outlined under Flex PACE INFO and Biofuels PACE.
Qualifying Requirements
Borrower - The borrower can be any person or entity whose business is in 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 a PACE qualified business, and all other service companies and wholesalers that generate 75% or more of their sales outside of the state of North Dakota.
Loan Limit - There are no maximum loan parameters for borrowing under this program.
Use of Proceeds - The proceeds of a loan may be used for the purchase of real property and equipment and certain working capital requirements. The program cannot be used to refinance any existing debt or for relocation within North Dakota.
Job Creation - The borrower shall demonstrate that within one year, there will be a
minimum of one job created and retained for every $100,000 of total loan
proceeds. Otherwise, the interest buydown will be prorated to reflect any
partial fulfillment.
Variable or Fixed Interest Rate - Either a fixed or variable interest rate may be used in the loan participation.
Participation Requirements - BND will evaluate all requests under this program in the same manner
as any regular bank participation. Therefore, qualifications, such as equity,
collateral, and information requirements is determined on a case-by-case
basis. Should BND approve the participation request, BND's participation
must be 50% to 80%.
Application Process
Application by a lead lender is required for BND's participation. See application
for additional documentation required when submitting a request to BND.
Accountability Information Release
Lead lender is responsible for servicing the loan.
Interest Rate Buy Down Participation
The second element of the PACE Fund combines the resources of the local community and the PACE Fund in buying down the interest rate on the loan.
Community Percentage Factor - A percentage factor has been assigned to most communities within the State. This factor determines the amount of the PACE Fund's participation (65% to 85%) in the funding of the interest rate buy down. This factor is based on four economic conditions (taxable sales and purchases, employment, taxable valuation and population).
Buy Down Funding - The PACE Fund may provide an interest rate buy down up to a maximum
of $250,000. In all cases, the buy down is matched by the community at
the designated participation level described under Community Percentage
Factor. In addition, the PACE Fund's participation is limited to the amount
required to buy down the interest to the lower of 5% below the yield rate
but in no event may the interest rate be more than five hundred basis points
below the national prime rate. The borrower's rate shall never fall below
1% at any time.
Community Buy Down Funding - The community's portion of the buy down cannot be funded in any way,
directly or indirectly, by the borrower or any individual or organization
that has a financial interest in the borrower. 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. If the community provides
its share of the PACE interest rate buy down as a loan, repayment of the
loan shall not commence and no interest shall start to accrue until the
PACE interest buy down has been fully expended.
Transfer of Funds - A trustee shall be appointed to act as the transfer agent for the buy down. Both the community and the PACE Fund will make periodic payments to the trustee to cover the interest rate buy down.
Default by the Borrower - If the borrower is in default under the loan agreements, the interest rate on the loan changes from the buy down rate to the original higher interest rate. The borrower shall accrue interest at the higher interest rate and all interest rate buy down funding is suspended until the loan is brought current.
Failure of the Community to Fund - If the community fails to fund any portion of its periodic payment, the PACE Fund's buy down payment shall continue and shall be shared by the lenders in proportion to their participation percentage in the loan. However, the community cannot apply for another PACE loan until its original PACE loan has been brought current. The community must prefund its entire portion of the buy down on any new loan prior to funding.
Fees
The lead financial institution may charge an origination fee of up to 1% of the total loan amount, which shall be shared with BND. A minimum PACE origination fee of $250 is charged by BND and may be included in the origination fee.
Flex PACE
Qualified Businesses -
This special feature of the 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 Qualification -
Jobs creation will not be a requirement of Flex PACE, but jobs will be
tracked for informational purposes.
FLEX PACE Funding-
Each biennium, BND will designate a portion of 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 borrower is capped at $150,000 of PACE funds per biennium under Flex
PACE.
Parameters -
Existing PACE program parameters (ex. interest rate buy down maximum, community
match, BND participation amount, default) will apply.
For more information about this program or other Bank of North Dakota programs,
contact:
Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
(701) 328-5671
1-800-472-2166 ext. 5671
TDD (Telephone Device for the Deaf) 1-800-643-3916
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