Finance Programs

Both states offer plenty of financing options to support your venture.

Growth Initiative Fund

The Growth Initiative Fund (GIF) is a revolving loan fund managed and administered by the GFMEDC. While the primary function has been serving as the community portion of the PACE & Flex PACE program with Cass County, ND (see Bank of North Dakota section below), a portion of the GIF’s funds are available for projects targeted at the emerging sectors identified in GFMEDC’s strategic objectives. Projects will be considered on a case-by-case basis.

Information on the PACE/Flex PACE and microloan programs can be found below. The funding partners program can be explored with GFMEDC for projects that involve additional funding partners (such as ND Development Fund, Bank of North Dakota, etc.)  and there are remaining financing gaps to be addressed.

GIF Programs & Applications

PACE & Flex PACE Loan Programs

For more program details, see Bank of North Dakota (BND) below.

Basically, PACE & Flex PACE are two low-interest financing programs where a primary sector company’s lender partners with BND on the main loan, and a community fund (such as our GIF) contributes an additional deferred-payment loan that helps trigger matching state grant funds to offset interest expense. The lead financing must be a term loan (monthly P&I payments) and proceeds must be used to purchase real property, equipment and/or certain working capital requirements.

Interested primary sector companies work with their lender on the lead loan application and credit analysis, and most commonly the lender will then contact BND and GIF about the next steps in the process. While BND does not require primary sector certification for the Flex PACE program, our GIF fund limits eligible applicants to primary sector companies.

For any questions, please feel free to to contact John Machacek.  You may also find the local PACE/Flex PACE application here.

Early Venture Microloan Program

The Early Venture Microloan Program is a loan program administered by GFMEDC. The program is designed to address financing challenges of early-stage primary sector entrepreneurs in Cass County, to ideally help startups progress to their next stages of revenue and access to other funding sources.

Applications approved by GIF will provide financing up to $50,000. Loan terms may vary between 1-5 years, with up to one-year of principal payment deferral (interest-only payments). Interest rate of 6-8%. An eligible application must include a thorough description of the product/service and plans; up-to-date SBDC-assisted financial projections; a demonstrated plan of projected revenue streams; and a plan of sources (funding) & uses (spending) of their project. An ideal applicant will be well-beyond the idea stage and will have spent efforts validating & working on their startup.

For more program information and criteria:

For any questions, please feel free to to contact John Machacek.

Bank of North Dakota

PACE & Flex PACE Program

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 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 $500,000.  The buy-down amount is calculated through a combination of a scoring based on either job creation or total project capital investment, as well as 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 or specific capital investment tiers requirements. BND buy-down is up to $200,000 for Flex PACE. While BND does not require primary sector certification for the Flex PACE program, our above-mentioned Growth Initiative Fund limits eligible applicants to primary sector companies.

MATCH Program

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 some of the nation’s lowest interest rates. Businesses that create new wealth for North Dakota and provide new jobs outside of the retail sector, especially in manufacturing, processing and value-added industries, are primary candidates. These companies shall provide evidence of considerable financial strength as demonstrated by a long-term investment grade rating. If a company does not have an adequate rating, it has three options to meet this requirement:

  • Credit enhancement by a financial institution. The bank or credit union can provide a letter of credit acceptable to BND or pledge Fed Book entry securities.
  • Guarantee from a federal guaranty agency or another company with an investment grade rating
  • Pledge a certificate of deposit or marketable securities of a quality and level satisfactory to BND

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

Beginning Entrepreneur Loan Guarantee Program

According to the Bank of North Dakota (BND), the Beginning Entrepreneur Loan Guarantee Program assists with business startup financing by providing financial institutions with guaranty of a loan not to exceed $500,000. It may be used in conjunction with other BND programs.

Accelerated Growth Loan Program

The Accelerated Growth Loan Program assists North Dakota-based technology companies with solid operations, good management and strong cash flow that are positioned for a period of accelerated growth or can show consistent monthly revenues above $50,000. These companies normally have limited assets to qualify for traditional bank financing.

Strong prospects for growth that could include purchase orders for merchandise or services. The company must show through its application that the prospect for sales growth is 15% or greater over the three-year period following the inception of the loan; OR A demonstrated sales record with minimum monthly recurring revenues of $50,000 per month. Software as a Service (SaaS) companies must have a minimum net annual revenue retention rate of 85%

Business Development Loan Program

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 lead lender participates with Bank of North Dakota, each sharing a portion of the loan exposure. 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.

North Dakota Department of Commerce Economic Development and Finance

North Dakota Development Fund

The North Dakota Development Fund is a secondary source of financing for new or expanding primary sector businesses located in North Dakota. The Fund provides gap-financing through loans and equity investments not available from most conventional lenders. The Fund administers two revolving loan pools, the Development Fund and the Regional Rural Revolving Loan Fund. In order to be eligible for the latter, a business must be located in a city with fewer than 8,000 residents that is located more than 5 miles away from a city with a population greater than 8,000. The Development Fund invests up to $3,000,000 per borrower, based on the project and job requirements. Generally not to exceed $40,000 (urban) or $50,000 (rural) per job created or retained. Loans may be structured as a direct loan, a participation loan with a local financial institution, or as subordinated debt. For loans, the interest rate varies and terms vary according to the uses of funding. Examples of eligible funding uses include purchasing real estate or equipment, providing working capital or purchasing inventory. Equity investments are typically held for a maximum of five years. The purpose is to provide the proper risk/return consideration in keeping with the legislative intent of the Fund. The Development Fund considers projects that are feasible and have a reasonable chance of succeeding. The Fund coordinates efforts between different sources of financing, the community and the primary sector business borrower.

LIFT Innovation Technology Loan Fund

LIFT is an innovation loan fund to support technology to provide financing for commercialization of intellectual property within the State of North Dakota. As established by legislation, there is no interest or payments on the loan for the first three years; in years four & five the loan with incur interest at 2% with interest-only payments required; the balance of the note is due in year six. The legislation outlines the following industries as appropriate uses for these funds:

  • Advanced computing and data management
  • Agriculture technology
  • Autonomous and unmanned vehicles and related technologies
  • Energy
  • Health care
  • Value-added agriculture
  • Value-added energy
  • Any industry or area specifically identified by the committee as an industry that will contribute to the diversification of the state’s economy.

The application is a two-step process: The first step is to start the application with basic company information – you will then receive an email to create an account and/or sign into the Partner Portal; The second step is to sign into the Partner Portal and complete the application and upload required supplemental documents. Applications will be reviewed on a first-come, first-served basis.

The use of the loan funds are available to enhance capacity and to the extent possible, leverage state, federal and private sources of funding. Loan funds may be used to conduct applied research, experimentation or operational testing within the state. Loan funds may not be used for capital or building investments or for research, academic or instructive programming, workforce training, administrative costs or to supplant funding for regular operations of institutions of higher education.

New Venture Capital Fund

The New Venture Capital Fund provides flexible financing through debt and equity investments not available from most conventional lenders and is available to any primary-sector business with the exception of production agriculture. This fund offers a variety of financing options in the form of traditional or convertible debt and equity investment. The structure of the investment is negotiated on a case-by-case basis. The business must be innovative, have a unique market aspect or customer base, be scalable and have the potential to return a significant benefit to the state of North Dakota.  The program is managed within the ND Development Fund.

Community Development Block Grant (CDBG)

The CDBG program provides financial assistance to eligible units of local Governments in the form of grants and loans for Public Facilities, Housing Rehabilitation, and Economic Development projects. Funding may be provided to support the installation of infrastructure, facilities and equipment for a qualified primary-sector company that is establishing a location in North Dakota and creating jobs for very low and low income individuals.

Minnesota Finance Programs

Minnesota Investment Fund

The Minnesota Investment Fund provides grants that create and retain high-quality jobs in Minnesota, with a focus on industrial, manufacturing, and technology-related industries, to increase the local and state tax base and improve the economic vitality of all Minnesota citizens.Grants are awarded to local units of government who provide loans to assist expanding businesses. Cities, counties, townships, and recognized Indian tribal governments are eligible.Loans for land, buildings, infrastructure improvement, equipment, and training to support businesses located or intending to locate in Minnesota are eligible. Working capital, retail business, and industrial park development projects are ineligible. All projects must meet minimum criteria for private investment, number of jobs created or retained, and wages paid. There is a maximum of $500,000 per grant. Only one grant per state fiscal year can be awarded to a government unit. At least 50 percent of total project costs must be privately financed through owner equity and other lending sources (most applications selected for funding have at least 70 percent private financing). Grant terms are a maximum 20 years for real estate and 10 years for machinery and equipment. Interest rates are negotiated.

Moorhead Community Loan Program; Moorhead Storefront Rehab Program

The Moorhead Community Loan Program is a gap financing mechanism that provides a qualified business with a loan up to $50,000 to support the purchase of land, buildings, machinery, equipment and/or working capital. The Moorhead Storefront Rehab Program provides 0% interest loans to small business owners to specifically fund exterior storefront rehabilitation. $10,000-$25,000 per storefront. Forgiveable after 5 years.  Requires a 50% match.

Small Business Development Loan Program

The Small Business Development Loan Program provides loans for business expansions that result in the creation of new jobs. Small business loans up to $5 million are made by the Minnesota Agricultural and Economic Development Board through the issuance of industrial bonds. Manufacturing and industrial companies located or intending to locate in Minnesota and meet the federal definition of a small business (generally those with 500 or fewer employees) are eligible.

Emerging Entrepreneur Loan Program (ELP)

The Minnesota Emerging Entrepreneur Loan Program (ELP) supports the growth of businesses owned and operated by minorities, low-income persons, women, veterans and/or persons with disabilities. DEED provides grant funds to a network of nonprofit lenders which use these funds for loans to start-up and expanding businesses throughout the state.

In order to qualify for a loan under the Minnesota Emerging Entrepreneur Loan Program (ELP), businesses must be based in Minnesota and owned and operated by one or more Minnesota residents who are minorities, low-income persons, women, veterans and/or persons with disabilities.

The state’s share of an ELP loan can range from a minimum of $5,000 to a maximum of $150,000 per project with state funds matched at least 1:1 by new private financing. Beginning microenterprises, including retail businesses, may apply for $5,000 to $35,000 throughout the state and $5,000 to $50,000 in low-income areas without private matching funds.

West Central Initiative Loan Fund

West Central Initiative assists businesses and communities in west central Minnesota by providing gap financing to eligible new and expanding businesses. West Cenral Initiative’s loan programs typically supplement conventional bank financing, anywhere from 10% to 40% of the total financing for qualified applicants. Eligible projects must be able to prove that a financing gap exists, and the bank is unable to fund the entire project. Small Enterprise Loan Fund (SELF) SELF is West Central Initiative’s fund for small loans of between $1,000 to $50,000, and includes smaller loans to businesses in the manufacturing or service sectors. A small number of loans are made to retail businesses that do not compete with others in their immediate trade area. Business and Industry Loan Fund The Business and Industry Loan Fund is used for loans from $20,000 to $300,000. Most of the loans in this fund are given to manufacturing businesses. WCI receives funds from several different sources for this loan program, and they all have different qualifying criteria for projects.

West Central Initiative Community-Based Component Funds

A number of Clay County communities offer their own community-based revolving loan funds through West Central Initiative. Each program had a varying focus and type of eligible businesses. The Clay County Loan Fund assists businesses located in Clay County, MN (outside of Moorhead), that demonstrate a financing gap and that most likely would not succeed without the fund’s support. Specific use of loan funds could include machinery or equipment, real estate, working capital, inventory and related expenses and professional fees. The maximum loan amount is $20,000 or ten percent of the net assets of the fund, whichever is greater, and can not surpass 50 percent of the total project cost. The Clay County communities of Barnesville, Hawley and Moorhead also have loan funds administered by West Central Initiative.

Other Programs

Depending on factors such as geography, population, industry, project type, etc., there may be other programs to consider such as those associated with the SBA, USDA, bond financing, etc. GFMEDC staff may suggest these programs as your particular project is evaluated.

North Dakota Opportunity Fund

The ND Opportunity Fund leverages private financing to help small businesses and manufacturers attain the loans and investments needed to expand and create jobs. A consortium of 38 municipalities across North Dakota has received funding for operating the loan participation program.  The municipalities in Cass County are Casselton, Fargo and West Fargo.  Loan funds can be used for construction, equipment, working capital, real estate and interim SBA 504 loans. Loan proceeds will not exceed $1 million and must not exceed more than 50% of the proposed project costs. This fund is typically used as a gap financing tool to lower the borrower equity portion and/or the lead lender’s total loan exposure. They also recently added a Collateral Support Program, which establishes pledged case collateral accounts with lenders to enhance loan collateral. The programs are administered by Lewis & Clark Development Group.

New Market Tax Credits (NMTC)

NMTC works to encourage and jumpstart investment in low income census tracts to create jobs and bring new opportunities to qualifying areas.

The goal of a NMTC award is to fill a financing gap for transformative projects which bring opportunities to qualifying areas. The program helps create capital that allows the lending partner to make loans and investments to businesses operating in low-income tracts that generally have better rates and terms and more flexible features than the market.

Please note that NMTC are administered by an approved NMTC lending partner.  Each partner may have their own specific goals for types of projects, industries, communities, etc.. Dakota Business Lending is a local example, having been awarded $30 million in 2021. Please contact Ryan at the EDC, (701)364-1919 for more information.

Projects located in qualifying census tracts are eligible for NMTC. You can access an interactive map of buildings and sites in the qualifying zones below:

New Market Tax Credit Buildings

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New Market Tax Credit Sites

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