How to Fund a Small Business in North Dakota: Loans, Grants, and Resources for Every Background

You have the idea. You have the plan. You’ve chosen your legal structure and registered your business with the Secretary of State. Now comes the question that derails more aspiring business owners than almost anything else: where does the money come from?

Here’s what most people don’t know: North Dakota has one of the most distinctive and accessible small business funding ecosystems in the country — anchored by something no other state has, the only state-owned bank in the nation. The Bank of North Dakota was created specifically to serve the state’s economic development needs, and it shows in the range of programs available to entrepreneurs that simply don’t exist anywhere else.

Layered on top of BND is a network of federal SBA programs, state Commerce initiatives, nonprofit lenders, community development organizations, and targeted funding for women, veterans, and Native American entrepreneurs. Most people only know the surface. This post goes deeper.

I’ve been a small business owner for over a decade and have worked alongside hundreds of North Dakota entrepreneurs navigating startup costs, expansion funding, and the moments when ambition outruns cash flow. What follows is a practical guide to the funding landscape — not a generic list, but a real map of what’s available and how to access it.

The Complete Series:

• Part 1: The Idea, Market Research, Business Plan, and Legal Setup
• Part 2: Funding Your Business — Loans, Grants, and Resources for Every Background (you are here)
• Part 3: Setting Up, Getting Insurance, Hiring, and Opening Day
• Part 4: Marketing, Scaling, and Eventually Selling Your Business
• Part 5: Using AI and Social Media to Launch Faster

Before You Apply for Anything: What Lenders Actually Look For

Every loan application — whether it’s a bank, BND, the SBA, or a nonprofit lender — is asking the same core questions: Can this business repay this money? Will this owner make it happen? Here’s what they’re evaluating:

• Credit score — Personal credit matters significantly for startups with no business credit history. Traditional lenders often want 680+. Some programs specifically designed for startups and underserved entrepreneurs go lower. Know your score before you apply.
• Business plan and financial projections — Credible numbers showing how the loan gets repaid. Not optimistic guessing — realistic projections based on your market research. Your free ND SBDC advisor can help you build this.
• Collateral — Assets that back the loan. For startups this is often personal assets. Several ND programs specifically reduce collateral requirements to lower this barrier.
• Time in business — Startups face more scrutiny than established businesses. Programs that specifically serve pre-revenue and early-stage businesses are worth knowing about — and North Dakota has several.
• Industry and business type — Some programs are limited to “primary sector” businesses (those that create new wealth by selling products or services to customers outside ND, or replacing previously imported goods). Know whether your business qualifies before applying.

Pro tip: Talk to your ND SBDC advisor before approaching any lender. SBDC advisors have helped prepare thousands of loan applications and know what each program’s underwriters actually want to see. This costs nothing and can be the difference between approval and rejection. Find your nearest center at ndsbdc.org.

The Bank of North Dakota — Your Biggest Funding Advantage

Let’s start here, because this is North Dakota’s secret weapon.

The Bank of North Dakota is the only state-owned bank in the United States. It was created in 1919 to serve North Dakota farmers and businesses — and it has been doing exactly that for over a century. BND doesn’t compete with local banks. It partners with them, providing guarantees and interest rate buy-downs that make loans possible for businesses that might otherwise not qualify.

When you walk into a community bank or credit union in Fargo, Bismarck, Grand Forks, Minot, or Williston to apply for a business loan, there’s a good chance BND is quietly in the background making that deal work. Understanding what BND offers helps you have a smarter conversation with your lender.

Beginning Entrepreneur Loan Guarantee

This program is built specifically for North Dakota startups. BND provides an 85% guarantee on loans up to $100,000 for beginning entrepreneurs — dramatically reducing the lender’s risk and making startup financing available to people who don’t yet have an established business track record.

To qualify you must be a North Dakota resident, have graduated from high school or have a GED, have relevant training or experience in your business type, and have a net worth under $500,000. The program can cover business startup expenses including accounting, legal, and planning costs. BND can also approve a guarantee on smaller loans up to $25,000 without requiring collateral — a significant barrier removed for true beginners.

This is the program to know if you’re starting your first business in North Dakota.

PACE — Partnership in Assisting Community Expansion

PACE is one of BND’s flagship programs and one of the most powerful small business financing tools in the state. It combines BND resources with local community funds to buy down the interest rate on a business loan — potentially reducing your rate by as much as 5% below prime.

PACE is available to primary sector businesses — manufacturing, data processing, communications, technology, and certain service industries that create new wealth for North Dakota. Loan proceeds can be used for real property, equipment, and working capital. There’s no maximum loan size, and the interest savings over the life of a loan can be substantial.

The community matching requirement means your local economic development organization plays a role — which is also how you access this program. Contact your city’s economic development office or local EDC alongside your lender.

Flex PACE

Flex PACE extends the interest buy-down benefit to businesses that don’t qualify as primary sector under the standard PACE definition. It’s designed for essential community businesses — retail, services, healthcare, childcare — where the community determines eligibility. If your business serves your local community but doesn’t meet the primary sector definition, ask your lender about Flex PACE.

Business Development Loan Program

This BND program assists new and existing businesses in obtaining loans that would otherwise be considered too risky for a standard financial institution. Maximum loan amount is $1 million. Proceeds can be used to buy or start a business, acquire property, purchase equipment, cover working capital, or refinance an existing loan. This is BND’s gap-filling tool for businesses that need financing but don’t fit neatly into other programs.

LIFT — Legacy Investment for Technology Loan Fund

The LIFT Fund, administered by ND Commerce in partnership with BND, provides low-interest financing for businesses commercializing intellectual property in North Dakota. Since its founding, LIFT has deployed over $45 million across 64 North Dakota companies in sectors including advanced computing, agricultural technology, energy, healthcare, and AI. If your business has a technology or innovation component, LIFT is worth investigating. Email LIFT@nd.gov for application information.

SBA Loans — Federal Programs Available Statewide

The SBA doesn’t lend directly to most businesses — it guarantees loans made by approved banks, making lenders willing to approve financing they’d otherwise turn down. SBA loans typically offer lower rates, longer terms, and lower down payments than conventional business loans.

SBA 7(a) — The Most Flexible Option

The SBA 7(a) loan covers almost any legitimate business purpose — working capital, equipment, real estate, business acquisition, debt refinancing. Up to $5 million, with repayment terms up to 25 years for real estate. The SBA guarantees up to 85% of loans under $150,000, making banks willing to lend to businesses they’d otherwise decline.

Critical note: SBA loans require proof of business insurance before funding closes. This is not optional. If you’re in the SBA application process, contact your insurance agent at the same time — not after approval. We cover business insurance requirements in detail in Part 3 of this series.

SBA 504 — For Major Fixed Assets

The SBA 504 loan is built for large fixed-asset purchases — commercial real estate, major equipment, building construction. Typically structured as 50% from a bank, 40% from a Certified Development Company at a fixed below-market rate, and 10% from you. Up to $5.5 million. If you’re buying a building or expanding a facility in North Dakota, the 504 deserves a conversation with your lender.

BND also participates in SBA programs through its SBA Guaranteed Loan Purchase Program — purchasing the SBA guarantee to further reduce the interest rate for North Dakota borrowers. Ask your lender whether BND participation is available for your SBA loan.

SBA Microloan — For Smaller Starts

The SBA Microloan provides up to $50,000 through nonprofit intermediary lenders for startups and early-stage businesses. Often comes with required business training. For North Dakota entrepreneurs, ask your ND SBDC advisor which local microloan intermediaries serve your area.

North Dakota Department of Commerce Programs

Innovate ND

Innovate ND is a voucher and grant program for North Dakota entrepreneurs with innovative business ideas. The program provides up to $50,000 in reimbursable expenses across two phases of $25,000 each — covering things like market research, business coaching, customer discovery, and validation work. Participants get one-on-one coaching from certified business coaches at one of North Dakota’s regional entrepreneur centers. Over the past two biennia, more than 70 North Dakota startups have gone through the program. If your idea has an innovative component, apply early — slots are limited each funding cycle.

North Dakota Development Fund (NDDF)

The NDDF provides gap financing — filling the space between what a bank will lend and what a project actually needs. Direct loans, participation loans, subordinated debt, and equity investments up to $3 million for primary sector businesses. The NDDF also administers the Angel Match Program, which matches investor commitments to support early-stage ND businesses, and a Child Care Loan Program providing financial assistance specifically to child care providers expanding capacity in the state. commerce.nd.gov/economic-development-finance/development-fund

Community Development Block Grant (CDBG)

CDBG funds can be used for real property, site improvements, infrastructure, and working capital for primary sector and retail businesses looking to establish or expand in North Dakota communities. Administered through ND Commerce and distributed through communities. Contact your city or county economic development office to find out if CDBG funds are available in your area.

Renaissance Zone Tax Incentives

If your business is located in or moving to a designated Renaissance Zone in North Dakota, you may be eligible for significant state and local tax exemptions on property improvements and income. Many North Dakota cities — including Bismarck, Fargo, Grand Forks, Minot, and Dickinson — have active Renaissance Zones. Contact your city’s planning or economic development office to check eligibility. Tax incentives aren’t cash, but they meaningfully reduce operating costs in the early years.

Funding for Women Entrepreneurs in North Dakota

North Dakota has dedicated resources for women starting and growing businesses — programs that recognize the specific barriers women face in accessing capital and provide targeted support to close that gap.

• North Dakota Women’s Business Center (NDWBC) — The SBA-designated Women’s Business Center for ND, operated by CTB. Free one-on-one business coaching, technical training, intensive development programs, and access to funding resources. Coaches in Bismarck, Fargo, Grand Forks, Wahpeton, and Williston. (701) 223-0707 | ndwbc.com
• Certified Women Owned Business Designation — CTB is the sole authorized certifier of women-owned businesses in North Dakota. This certification can qualify your business for state and federal contracting set-asides, supplier diversity programs, and specific grant programs. Apply through the NDWBC.
• SBA Women-Owned Small Business (WOSB) Federal Contracting Program — Federal contracting set-asides for certified women-owned businesses in industries where women are underrepresented. sba.gov
• Amber Grant — $10,000 monthly grants and $25,000 annual grants for women entrepreneurs nationwide. Free two-question application. North Dakota women are eligible. ambergrantsforwomen.com
• SBA Microloan Program — Strong outreach to women-owned startups through nonprofit intermediary lenders. Ask your ND SBDC advisor which microloan lenders serve your region.
• NDWBC Funding Resource List — The Women’s Business Center maintains an updated list of funding opportunities specific to women-owned businesses at ndwbc.com/funding

Funding for Veteran Entrepreneurs in North Dakota

Veterans bring real advantages to business ownership — discipline, mission-focus, leadership under pressure. North Dakota has resources that recognize this and provide accelerated support.

• SBA Boots to Business — Free entrepreneurship training for veterans, active duty, Guard, Reserve, and military spouses. sba.gov/boots-to-business
• Veterans Business Outreach Center (VBOC) of the Dakotas — Free one-on-one business advising, business plan review, and SBA resource connections for veterans and military spouses in North and South Dakota
• SBA Veteran Certification — SDVOSB and VOSB certifications open federal contracting set-asides. veterans.certify.sba.gov
• ND Dept. of Veterans Affairs — Business Resources — State-level resource hub for veteran entrepreneurs connecting to programs and support
• BND Beginning Entrepreneur Loan Guarantee — Veterans are eligible borrowers under this program; military service can count toward the relevant training/experience requirement
• ND SBDC — SBDC advisors serve veteran entrepreneurs alongside all other ND business owners with free, confidential advising at all eight regional centers

Funding for Native American Entrepreneurs in North Dakota

North Dakota is home to five federally recognized tribal nations — the Mandan, Hidatsa & Arikara Nation, the Spirit Lake Nation, the Standing Rock Sioux Tribe, the Turtle Mountain Band of Chippewa Indians, and the Sisseton-Wahpeton Oyate Nation. Native American entrepreneurs — on or off reservation — have access to specific programs that recognize both the opportunities and structural barriers in Indigenous entrepreneurship.

• ND Native American Small Business Support Program — ND Department of Commerce administers $600,000 in grants ranging from $10,000–$600,000 for businesses at least 51% Native American-owned. Eligibility is based on ownership and control — not blood quantum. Funds support business growth and commercialization. commerce.nd.gov
• Sacred Pipe Resource Center — Bismarck-based organization providing small business workshops, counseling, technical assistance, and showcasing events for Native American entrepreneurs
• Native American Development Corporation (NADC) — A certified Native CDFI serving the Dakotas, Montana, and Wyoming. Business loans and technical assistance with cultural understanding built into the process. nadc-nabn.org
• SBA 8(a) Business Development Program — Federal contracting set-asides for socially and economically disadvantaged business owners including Native Americans. sba.gov
• Tribal Economic Development Offices — Each of North Dakota’s five tribal nations has its own economic development programs, community lending resources, and business support infrastructure. Connect directly with your nation’s EDO for programs not available through state or federal channels.
• Strengthen ND / Building Native Enterprises — Federally funded initiative working with all five ND tribal nations to support Native-led startups and existing businesses, especially in tourism and cultural enterprise

The HELOC Conversation — Honest Talk About Using Home Equity

A Home Equity Line of Credit is one of the most commonly used startup funding tools in the country and one of the least talked about honestly. If you own a home in North Dakota with equity, you may be able to borrow against it at a lower interest rate than most business loans — without a business credit history, SBA approval, or PACE eligibility requirement.

People use HELOCs to start businesses. Including people whose businesses went on to do very well.

But here’s what needs to be said clearly: your home is the collateral. If the business doesn’t generate enough revenue to repay the line, the debt stays attached to the roof over your family’s head. That is the real risk. In a state where tight-knit communities mean business struggles are rarely invisible, the personal financial stakes of a HELOC are worth understanding completely before you sign.

If you do use home equity to fund your business, three things should be in place before you draw a dollar:

1. Your homeowners coverage is adequate — The asset backing your business debt needs to be fully protected.
2. Your life insurance is current — If you’re gone, someone has to repay that line. Don’t leave your family with business debt alongside grief.
3. You have a disability income plan — What happens to your loan obligations if you’re sick or injured before the business can cover them? This is the scenario that almost no one plans for — and it’s the one that matters most in the early years when debt is high and revenue is still building.

These conversations belong in the same room as your funding plan. If you’re considering a HELOC for startup capital, talk to an insurance and financial planning professional before you sign — not after. We cover business insurance and protection planning in depth in Part 3 of this series, but the personal coverage piece starts now.

A Word on Disability Insurance for Business Owners

Most startup funding conversations skip this entirely. It shouldn’t be skipped.

If you’re taking on debt to start a business — SBA loan, BND guarantee, HELOC, equipment financing, a personal guarantee on a commercial lease — and you become disabled before the business can carry those obligations, what happens? Your lender doesn’t pause. Your landlord doesn’t defer. Your obligations continue whether you’re working or not.

Disability insurance replaces a portion of your income during recovery, allowing you to meet financial obligations and keep the business alive through a health crisis. For a business owner with startup debt in the early years, this is foundational protection — not an optional add-on. We’ll cover this and all business insurance requirements in Part 3. But if you’re borrowing to start a business today, add “review disability coverage” to your pre-funding checklist right now.

Other Funding Sources Worth Knowing in North Dakota

Local Economic Development Organizations

Every major city and many smaller communities in North Dakota have an economic development organization — the Greater Fargo Moorhead EDC, Bismarck-Mandan Chamber EDC, Grand Forks Region EDC, Minot Area Development Corporation, Williston Economic Development, and more. These organizations often administer local revolving loan funds, can serve as the community partner in BND PACE deals, and know every funding resource available in their region. They should be among your first calls.

Business Credit Cards — For Managed Short-Term Needs

A business credit card opened in your LLC’s name, used responsibly, and paid on time builds business credit history for future loan applications. It’s not a substitute for real financing but is a legitimate tool for managing short-term operational cash flow while your business credit profile develops.

Crowdfunding

Platforms like Kickstarter and Indiegogo work best for consumer products and community-driven ventures with a compelling story. A successful crowdfunding campaign validates demand while raising startup capital. It requires active marketing and an existing audience — not passive income.

Angel Investors and the NDDF Angel Match Program

The NDDF’s Angel Match Program matches investor commitments to early-stage North Dakota businesses — making angel investment more accessible for qualifying companies. If you’re raising equity, ask ND Commerce whether your business qualifies. contact the NDDF directly at commerce.nd.gov/economic-development-finance/development-fund.

The Most Important Funding Advice in This Post

Talk to your ND SBDC advisor before you apply for anything.

They have reviewed thousands of loan applications. They know which BND program fits your business type, which lenders in your region work with Flex PACE, whether Innovate ND is open for applications, and what your SBDC advisor’s peers at Commerce are prioritizing this funding cycle. That knowledge is free. There is no reason not to use it first.

Find your nearest ND SBDC center at ndsbdc.org.

Quick Reference: North Dakota Small Business Funding Resources

What Comes Next

You have your funding plan. The next step is setup — physical space, insurance, first hires, and the moment you actually open your doors. Part 3 covers what really happens when you go from planned to operational: the insurance coverage every North Dakota small business needs before opening, what workers’ compensation actually requires in ND, and why most commercial leases require proof of insurance before you can move in.

If you have questions about insurance as part of your startup financial plan — including how to budget for it before your first dollar of revenue — we’re licensed in North Dakota and here for that conversation now.

Ready to talk through what business insurance looks like for your North Dakota startup? Contact Mitchell Insurance Agency for a free, no-pressure conversation.

Mitchell Insurance Agency LLC is a licensed independent insurance and financial planning agency serving North Dakota, Minnesota, South Dakota, Iowa, Wisconsin, and Pennsylvania. This content is for educational purposes only and does not constitute legal, tax, or financial advice. Loan program details, interest rates, and eligibility requirements change — verify current information directly with each program and lender. Resource links are provided as a public service.

← Part 1: The Idea, Market Research, Business Plan, and Legal Setup | Part 3: Setting Up, Getting Insurance, Hiring, and Opening Day →