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PACE Program - (Partnership in Assisting Community Expansion)

The PACE Fund assists North Dakota communities to expand their economic base by providing for new job development.

This program has two major elements: (1) participation by BND with a local lender in a community based loan, and (2) participation by the PACE Fund with the local community in reducing the borrower's overall interest rate.

The PACE Program has expanded to include features outlined under the Flex PACE Program and Biofuels PACE Program.

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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, major tourist attractions, holding companies involved in leasing assets to entities otherwise defined as a PACE-qualified business, intermodal service facilities and all other companies and wholesalers that generate 75% or more of their sales outside of the state of North Dakota.

A holding company may qualify provided the benefit of the PACE buydown flows through to the lessee. The lessee will be responsible for satisfying the job creation requirements of the program. If no less than 40% of the space is used by the PACE qualified business, the entire requested loan amount for the facility will be deemed as a PACE qualified project, subject to all other requirements of the program.

Loan Limit - There are no maximum loan parameters for borrowing under this program.

Use of Proceeds - The proceeds of a loan may be used to purchase real property, 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 are 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 required documentation when submitting a request to BND.

The 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 community 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 $300,000. 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 500 basis points below the national prime rate. The borrower's rate shall never fall below 1% at any time.

Community Buydown Funding - The community's portion of the buydown 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 buydown as a loan, interest may accrue; however, repayment of principal or interest on the loan from the community shall not commence until the PACE interest buydown has been fully expended. The community has the option of meeting its matching requirement in the form of a contribution of direct cash, loans, equity, investments, land, property or infrastructure. Each may count towards the community's funding of its portion of the buydown. Property tax exemptions or payments in lieu of property taxes are not eligible as community contributions for the purpose of the PACE Program.

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.


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.

For more information please contact us at:

Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509

800.472.2166 ext. 328.5777
TTY: 800.366.6888