Farm and Ranch Participation Loan Program
BND's Farm and Ranch Participation Loan Program is founded on the principles that all loans should:
- Serve the legitimate agricultural credit needs of the state
- Be made on a sound and collectible basis
The Farm and Ranch Participation Loan Program is generally “market driven” in terms of the rates, terms and conditions offered to a borrower. In most instances, BND’s participation under this program is needed to assist a financial institution with a borrower whose financing needs have outgrown the legal lending or exposures limits of the originating lender.
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 for Use of Proceeds - BND will consider a broad range of loan applications. Desirable loans include, but are not limited to, the following:
- Purchase of land, buildings, livestock and equipment
- Working capital required for operating
- Refinancing an existing loan
- For any other reasonable farm and ranch operation 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 is generally 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, inventory and government payments
- Chattel security including crops, equipment and livestock
- Securities issued by the federal government or its agencies
- A first mortgage on farm or ranch property
In addition, personal guarantees are required from the principals with respect to corporate and partnership borrowings. Crop insurance is generally required on operating loans.
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. The 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 are taken into consideration.
Repayment Terms
BND places primary emphasis upon a borrower's ability to repay a loan rather than upon the collateral pledged as security. BND participates 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 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:
- Real Estate - 12 to 25 years
- Equipment - 5 to 7 years
- Operating - 1 year
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 please contact us at:
Bank of North Dakota
1200 Memorial Hwy
PO Box 5509
Bismarck, ND 58506-5509
(701) 328-5624
1-800-472-2166 ext. 5624
TDD (Telephone Device for the Deaf) 1-800-643-3916
