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Commercial Bank Participation Program
BND's participation loan program is founded on the principles that all loans should:
- Serve the legitimate credit needs of the State.
- Be made on a sound and collectible basis.
The total loans and extensions outstanding at any one time to a single
borrower may not exceed 15% of BND's total capital. All loans are reviewed
in accordance with BND's lending policies and sound banking practices including,
but not limited to, the intended purpose of the loan, the ability to repay,
the business and its management and the feasibility of the project.
Qualifying Requirements Use of Proceeds - BND will consider a broad range of loan applications. Desirable loans include, but are not limited to, the following:
- Business and industrial acquisitions.
- Construction, conversion, expansion, repair and modernization.
- Purchase of land, buildings and equipment and the repair and modernization
of the machinery and equipment.
- Start-up and working capital.
- Refinancing an existing loan.
- For any other reasonable business purpose.
Equity - Specific equity requirements have not been established. Each loan is reviewed on its own merits. The amount of equity required is evaluated along with all other elements of the business.
Collateral - Adequate collateral will generally be required to protect the interest of BND. The collateral must be of such a nature that repayment of a loan is reasonably assured. Examples of acceptable collateral may include:
- Accounts receivable and inventory for short-term loans.
- Machinery and equipment which have an established market.
- Securities issued by the federal government or its agencies.
- Letters of credit from acceptable financial institutions.
- A first mortgage on commercial real property.
In addition, personal guarantees are required from the principals with respect to corporate and partnership borrowings.
Application Process
A lead lender makes an application for BND's participation in a loan. See application for additional documentation
required when submitting a request to BND. Lead lender is responsible for
servicing of loan.
Interest Rate
The interest rate on BND's participation percentage is set in accordance with either the loan policies for the program or the current market rate for similar loans. Such factors as risk, liquidity of collateral, equity position, repayment and the term of the loan will all be taken into consideration.
Repayment Terms
BND will place primary emphasis upon a borrower's ability to repay a loan rather than upon the collateral pledged as security. BND will participate in a loan only when a specific source of repayment can be identified and agreed upon by all parties. Such a source must reasonably assure repayment. The repayment terms assigned to these loans will vary depending upon the use of the proceeds as well as the overall nature of the business. The following maturities can be used as a general guideline for the term of loans.
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| Real Estate |
12 to 20 years |
| Equipment |
5 to 7 years |
| Working Capital |
3 to 5 years |
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Fees
Commitment fees, origination fees and service fees may be charged. These fees will depend upon the loan request and be reviewed on an individual basis.
For more information about this program or other Bank of North Dakota programs, contact:
Bank of North Dakota
700 East Main Ave
PO Box 5509
Bismarck ND 58502-5509
(701) 328-5671
1-800-472-2166 ext. 5671
TDD (Telephone Device for the Deaf) 1-800-643-3916
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