State Financing and Incentives
Bank of North Dakota (BND)
- Flex PACE reduces the interest rate for qualified service and retail businesses; the maximum benefit is $100,000 in interest reduction (as a grant).
- PACE Program reduces the interest rate for a qualified primary sector business that generates 75% or more of their sales outside the State of North Dakota. The maximum interest reduction is $300,000 for primary sector (as a grant).
Match Program is designed to encourage and attract financially strong companies to North Dakota. BND will participate in loans to financially strong companies and provide interest rates at some of the lowest in the nation.
- Maximum loan award is $10 million; no minimum award.
- 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.
- Loan funds may be used to finance real estate, machinery and equipment and for the purchase or leasing equipment.
- 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.
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.
- 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 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 may not exceed 10 percent of the total loan amount and is capped at $500,000.
- Interest rate charged at the time of funding by the lead lender may not exceed 3 percent above BND’s Base Rate.
Beginning Entrepreneur Loan Program provides a loan guaranty to an originating lender providing business start-up financing or early stage business expansion.
- Guaranty is not to exceed $200,000 and five years.
- Proceeds may be used to finance purchase or improvements of real property, equipment or personal property, working capital, child care home, group or center licensed by the Department of Human Services, business start-up expenses including accounting, legal and business planning, and refinance or consolidate debt, not to exceed 20% of total loan.
- BND may guarantee a loan up to $5,000 to a beginning entrepreneur for business start-up expenses including accounting, legal and business planning. Guarantee fee is 0.5% per year on BND commitment of less than five years or a one-time fee of 2% of the guaranteed portion for a five-year guarantee commitment. The guarantee fee may be included in the loan or in the rate charged by the lender.
Envest Loan may be used to purchase shares in start-up or expansion of ag processing businesses intended to process ND-grown products.
- Feedlot or dairy operations must feed a byproduct from an ethanol or biodiesel facility.
- Borrower must be a North Dakota resident who owns no more than 25 percent of the project. It is desirable that the plant be located in North Dakota, however, exceptions may be made based on the overall economic benefits to the state.
- Project ownership may be other than a cooperative business structure if the intent of the loan program is met. Purchase shares in an ag processing plant intended to process North Dakota products. Purchase of equity shares in a North Dakota feedlot or dairy operation that feeds a byproduct of an ethanol or biodiesel facility.
North Dakota Department of Commerce
- North Dakota Development Fund: Provides direct loans to primary sector businesses. Rates are typically 3-4%; however lower rates have been secured based on the strength of the applicant. Equity investments are also available.
- Community Development Loan Fund/Governor’s Fund: Funds can be used to match CDBG/CDLF funds provided through South Central Dakota Regional Council; same terms and conditions apply.
- Ag Products Utilization Fund: Provides grants to support the development of business ventures that will result in development of new and expanded uses of North Dakota agricultural products and resources. Six categories of grants through APUC are:
- Basic & Applied Research Grants
- Marketing & Utilization Grants
- Farm Diversification Grants
- Technology & Prototype
- Technical Assistance
- Nature-Based Agritourism
A maximum of 15 qualifying applicants present funding proposals on a quarterly basis. Proposals are not limited to a specific dollar amount, but some grant categories have funding caps.
Rural Development Finance Corporation
- Loan funds are used to help local development groups, banks, regional councils and other development entities to expand their lending capacity to assist local projects including business startups, expansions and strategic improvements such as essential community services and facilities (fire protection, ambulance, water and sewer projects, and medical), and projects that enhance existing and new primary sector and service/retail business.
- Funds can be used for structural improvements, equipment and expenditures that will enhance the overall image of the business and the commercial district of North Dakota rural communities.
- Funds can be borrowed up to 10 years, 50% of the total amount financed.
- Interest rates are 2% for business loans and 1% for essential community services/facilities.
State Tax Department
- Sales and Use Tax Exemption: Available to qualified companies engaged in manufacturing and agricultural processing including equipment and computer equipment used as an integral part of a primary sector business.
- Wind-powered electrical generating facilities can receive an exemption for building materials, production equipment and other tangible personal property if constructed between July 2001 and January 2011.
- Requests for approval to buy machinery, equipment, or goods without paying tax or requests for refunds of tax paid on goods that qualify for exemption must be made in writing to the State Tax Commissioner, 600 East Boulevard Avenue, Bismarck, ND 58505 Phone: (701) 328-2770.
- Automation Tax Credit: Primary sector businesses are eligible for a tax credit of 20% of the cost of the manufacturing machinery and equipment purchased in the taxable year.
- Companies can carryforward unused credits.
- Automation tax credit is effective for 2015, 2016 and 2017. Aggregate credit for the state is $2 Million in 2015, $500,000 for 2016, and $500,000 for 2017.
- If applications for the credit exceed the amount of available credits in a calendar year, the Tax Commissioner prorates the credits among the claimants.
- Income Tax Exemption: Up to 100 percent and up to 5 years on state income tax.
- Seed Capital Investment Credit: An individual, estate or trust making an investment in a North Dakota company is allowed an income tax credit equal to 45 percent of an investment of at least $5,000 but not more than $500,000.
- Additional Income Tax Credits Available in North Dakota:
- Agricultural Commodity Processing Facility Investment Tax Credit
- Biodiesel (Crushing Soybeans)
- Geothermal, Solar or Wind Energy
- Investor Tax Credit
- Internship Employment Credit
- Research Expense Credit
- Workforce Recruitment Credit
Valley City - Barnes County Development Corporation
250 West Main Street
Valley City ND 58702
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