Despite its smaller population and GDP, North Dakota remains an excellent small business state and is often one of the nation’s leaders in job creation. The Peace Garden State also features a business-friendly tax policy and regulatory environment.
However, many North Dakota small business owners still rely on financing help to launch or grow their enterprises. Entrepreneurs have diverse North Dakota business loan options, but choosing the best program for your needs and cash flow is essential.
This guide explores what you should know about business loans in North Dakota, including the available options, pros and cons, and the application process. Specifically, we’ll answer these questions and more:
North Dakotans can access various business loan program options to fund their operations.
Working Capital Loans: Working capital loans in North Dakota provide financing to cover a business’s day-to-day operational expenses. Typical uses of working capital loan funds include inventory purchases, payroll, rent, and other short-term financial needs. They provide the cash flow to keep operations running smoothly and seize economic opportunities. Working capital loans are typically easier to qualify for than most other types of business loans, making them a popular choice for small businesses needing quick funding.
Business Line of Credit: A business line of credit in North Dakota is a flexible financing option that allows small businesses to access funds as needed. Instead of a lump sum payment, funds for a small business line of credit are activated as an available credit limit. A revolving line of credit works similarly to a credit card, where you can borrow and repay funds as needed and only pay interest on the amount you use. This type of financing is ideal for covering short-term expenses, managing cash flow fluctuations, or seizing growth opportunities without applying for a new loan each time.
Revenue-Based Financing: Revenue-based financing in North Dakota is a form of alternative small business funding where the company’s revenue determines eligibility and amounts. Repayment comes directly from a percentage of future revenue. This type of financing program allows businesses to access capital without taking on additional debt, making it an attractive option for companies with fluctuating revenue streams.
SBA Loans: SBA loans provide funding to help businesses start, grow, and succeed. The Small Business Administration (SBA) partially guarantees these loans, providing security for lenders and allowing small businesses better access to capital. These partially guaranteed loans offer favorable terms such as lower interest rates and more extended repayment periods than conventional loans, making them an attractive option for an ND small business owner. An SBA loan in North Dakota can be used for various purposes, including working capital and equipment purchases. SBA 504 loan programs fund commercial real estate and other major fixed assets but require working with a certified development company (CDC).
Invoice Factoring: Invoice factoring in North Dakota is an alternative business funding option in which a business sells its accounts receivable to a third party at a discount. This provides immediate cash flow, allowing the business to cover expenses or invest in growth without waiting for customers to pay their invoices. The factoring company then collects the total amount from the customers directly.
Merchant Cash Advance: A merchant cash advance (MCA) in North Dakota is a form of financing where a business receives a lump sum of money upfront in exchange for a percentage of future credit card sales. Small businesses with fluctuating revenue streams or those needing quick access to capital typically use this type of funding. While merchant cash advances can provide fast funding, they often come with high fees and may not be suitable for all businesses.
Business Term Loan: Business term loans in North Dakota are a type of financing in which a business borrows a lump sum and repays it with interest over a set period, with a fixed interest rate and consistent monthly payments. These loans are typically long-term financing, but there are also short-term business loans. Loan terms can vary. Businesses usually use term loan proceeds for significant investments like equipment purchases, paying off existing business debt, commercial property purchases, or a business expansion project. The interest rates and terms of business term loans can vary depending on the lender and the borrower’s creditworthiness.
Equipment Financing: Equipment financing in North Dakota is a type of small business loan specifically used to purchase equipment and machinery for operations. Equipment loans allow businesses to acquire necessary assets without draining their cash reserves. Typically, the financed equipment serves as collateral for the loan, making it easier for companies to secure funding.
Asset-Based Loans: Asset-based loans (ABL) in North Dakota allow small businesses to unlock the value of the assets on their balance sheet to secure funding. ABL lenders have business assets appraised and then issue loan amounts based on the appraisal value. The assets become collateral for the loan, meaning the lender can claim the assets in case of default. Some examples of asset-based business loans include commercial real estate loans, certain construction loans, secured term loans, and accounts receivable financing.
North Dakota offers several specialized financing options to help small businesses succeed and contribute to the state’s economic growth. These programs provide flexible terms, competitive interest rates, and tailored support to help businesses expand, invest in equipment, and create jobs.
The Bank of North Dakota (BND) partners with local lenders to offer a variety of business loans tailored to meet the needs of small businesses and entrepreneurs. These programs are designed to provide access to capital, encourage business growth, and foster economic development across the state.
Administered by the Lewis & Clark Development Group, the North Dakota Opportunity Fund provides gap financing to small businesses in partnership with local lenders. This program helps borrowers access funds for working capital, purchasing equipment, or expanding operations, with a focus on creating and retaining jobs in the community.
The Rural Microentrepreneur Assistance Program offers financial and technical support to small businesses in rural areas. Loans and grants help entrepreneurs secure funding for startup costs, equipment, or working capital while providing guidance to ensure long-term success.
The North Dakota Development Fund supports businesses seeking financing for expansion, new facilities, or equipment purchases. This program aims to attract new investments, create jobs, and foster statewide economic development by offering flexible terms and working alongside private lenders.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
North Dakota’s economy thrives on its diverse mix of industries, which provide significant opportunities for small business development. The state’s natural resources, skilled workforce, and supportive programs help industries flourish and create jobs.
Here are some of the most prominent industries in North Dakota:
As a leading producer of wheat, soybeans, and sunflowers, North Dakota’s agriculture sector drives the state’s economy and supports small business growth and development.
The state is a major player in oil, gas, and renewable energy production, offering opportunities for businesses involved in extraction, refining, and alternative energy technologies.
Focusing on machinery, food processing, and fabricated metals, North Dakota’s manufacturing industry supports economic growth and provides essential goods for domestic and international markets.
The tech sector is growing rapidly, fueled by programs like LIFT that encourage innovation in software development, data processing, and biotechnology.
North Dakota’s healthcare industry is critical for residents and contributes to the economy through hospitals, clinics, and specialty care providers.
The state’s natural attractions, such as Theodore Roosevelt National Park and cultural heritage sites, draw visitors and support small businesses in hospitality and retail
North Dakota business loans offer a range of benefits that help small businesses thrive. These loans provide access to capital to fuel growth, fund equipment purchases, or support working capital needs.
With diverse loan options tailored to different industries and business stages, borrowers can find solutions that meet their unique requirements. Competitive interest rates make financing more affordable, while flexible terms allow businesses to manage repayment effectively.
Additionally, securing a loan helps build business credit, paving the way for future borrowing opportunities. Many loan programs also foster networking by connecting borrowers with lenders, certified development companies, and economic development organizations, creating partnerships that promote long-term success.
While business loans in North Dakota provide significant opportunities, they also have drawbacks. Borrowers may face a high cost of debt, particularly if interest rates or fees are not carefully managed.
Traditional lenders often have stringent qualifications, such as a strong credit history and financial performance, which can exclude some small businesses. Many loans require collateral, placing business assets at risk, and personal guarantees are common, potentially endangering personal assets.
Finally, late payments or defaults can harm a business’s credit rating, making it harder to secure financing in the future. Businesses must weigh these risks carefully before pursuing a loan.
The loan application process and required paperwork depend on your chosen North Dakota business loan. Funds can be approved and distributed for most products within three business days.
Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and additional information required for all North Dakota business loans:
SBA Loan options require additional documents and information, such as business tax returns, financial statements, and a formal business plan. Visit our SBA Loan page for further information and learn what’s needed for the application.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your business bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks (or more in some cases) to receive funding.
Your North Dakota business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your loan balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
If your application is declined, you might have applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
Your loan application might also be declined after it is determined that you cannot afford to take on more debt. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through the UCS site and are usually much more accessible to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
North Dakota small business owners have access to various lenders for business financing, each offering unique benefits and drawbacks. Depending on your business’s needs and qualifications, you can choose from traditional lenders, alternative lenders, loan marketplaces, or Community Development Financial Institutions (CDFIs).
Traditional lenders like banks and credit unions offer business loans with low interest rates, fixed-rate financing, and long repayment terms. However, qualifying for bank financing can be challenging, as it typically requires excellent credit, multiple years in business, high annual revenue, consistent cash flow, and collateral.
Large national banks often offer more significant credit facilities, making them ideal for larger commercial enterprises. However, they may lack the personal touch or a focus on small businesses. On the other hand, local lenders like regional banks and credit unions are often more flexible, better understand the local market, and may be more willing to work with small businesses to create a custom loan package.
Alternative lenders have revolutionized small business financing by offering borrowers a fast, convenient, and accessible option. With streamlined online applications, accessible qualifications, quick approvals, and rapid funding, alternative lenders are a go-to for businesses needing funds quickly.
Although they generally charge higher interest rates than traditional lenders, many business owners find the trade-off worthwhile due to the ease of access and speed of funding. These lenders are particularly helpful for newer businesses or those with less-than-perfect credit.
Small business loan marketplaces (like UCS) have been game changers for North Dakota business owners. These platforms allow borrowers to submit a single online application and access a network of lenders. By saving time and simplifying the process, marketplaces reduce stress for business owners.
Approved businesses receive multiple funding offers, enabling them to choose the option that best suits their needs and cash flow. Many marketplaces also offer a concierge service, connecting applicants with lending experts who guide them through the process and help select the most suitable funding package.
Community Development Financial Institutions (CDFIs) are critical in providing business loans to underserved communities in North Dakota. These mission-driven lenders focus on supporting businesses that may not qualify for traditional financing, offering flexible terms and low-interest loans.
CDFIs also provide technical assistance to help borrowers succeed, making them an essential resource for startups, rural businesses, and entrepreneurs seeking to create jobs and drive economic development in their communities.
North Dakota offers several small business assistance programs through government and nonprofit organizations to support business growth and development. These programs provide training, resources, and mentoring to help small businesses succeed in a competitive market.
Innovate ND supports entrepreneurs and startups in North Dakota by offering resources, training, and financial assistance for early-stage business development. The program provides coaching, mentoring, and funding opportunities to help innovative businesses turn ideas into viable ventures.
The North Dakota Small Business Development Center (SBDC) provides free training, consulting, and resources to small businesses and entrepreneurs. Through workshops and one-on-one counseling, the SBDC helps businesses with topics like business planning, marketing, financial management, and expansion strategies. Their services are tailored to help small businesses achieve long-term success.
North Dakota Economic Development & Finance offers support programs to foster economic growth in the state. The organization provides training sessions, technical assistance, and resources for businesses looking to expand or enter new markets. They also connect businesses with financing options and incentives to support job creation and innovation.
The SBA Regional Office in North Dakota focuses on providing resources to small business owners, including webinars, workshops, and training programs. These sessions cover vital topics such as marketing strategies, business planning, and navigating the application process for government contracts. While financing is part of their services, the SBA Regional Office emphasizes equipping businesses with knowledge and tools to succeed.
Local resources like SCORE and Chambers of Commerce assist small businesses in North Dakota. SCORE provides free mentoring and business advice from experienced professionals, while Chambers of Commerce foster networking, training events, and advocacy for small businesses within their communities. These organizations help businesses connect with local opportunities and resources to thrive.
In addition to small business lending, North Dakota entrepreneurs can seek funding via small business grants. Government agencies, nonprofits, and other organizations offer these incentives to encourage specific economic goals. Small businesses don’t have to repay this funding, but small business grants are often highly competitive.
Here are some small business grants available in North Dakota:
Small business tax credits reduce a company’s tax burden, freeing up capital for reinvestment. Most tax credits aim to incentivize specific goals, such as job growth or fostering economic development in underserved areas.
Here are some small business tax credits available in North Dakota:
A low credit score limits financing options, but credit-challenged South Dakota small business owners can obtain financing with bad credit business loans. These specialized financing options focus on a business’s cash flow and growth potential more than the personal credit score of the business owner(s), increasing your chances of credit and lender approval.
Several alternative lenders specialize in providing business financing for credit-challenged entrepreneurs. Online lenders offer easy online applications with minimal documentation, quick decisions, and fast funding, which benefits small businesses with urgent capital needs.
However, business loans for bad credit often carry high interest rates and increased fees. In addition, you may receive a lower maximum loan amount, have shorter repayment terms, and require more frequent repayment. These conditions can lead to further financial strain if not properly managed. Ensure you have a plan and budget before agreeing to a bad credit business loan.
A popular strategy for SD business owners is to use a bad credit business loan as short-term financing until their credit improves. With a better credit score, entrepreneurs can potentially access lower-cost, long-term loans and pay off bad credit business loan debt.
Business loans in North Dakota can help take your company to the next level, but understanding and carefully reviewing the available options is crucial to success. Aim for a small business loan that provides the necessary funding for your goals with a repayment structure conducive to your cash flow to avoid potential pitfalls.
Consider getting offers from multiple lenders. This lets business owners compare different loan amounts, interest rates, and repayment structures to find the best deal for your situation.
Contact us if you’re ready to start your North Dakota business loan journey. Our alternative financing experts can help you find the best small business loan to fuel growth in The Peace Garden State.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
