# Title 6 — Banks and Banking

## Chapter 6-09.15 — Beginning Entrepreneur Loan Guarantee Program

### § 6-09.15-01. Definitions.

As used in this chapter, unless the context otherwise requires:
1. "Beginning entrepreneur" means a resident of this state who:
a. Has graduated from high school or has received a general equivalency certificate.
b. Has had some training, by education or experience, in the type of
revenue-producing enterprise which that person wishes to begin.
c. Has, including the net worth of that person's dependents and spouse, if any, a net
worth of less than an amount determined by the Bank of North Dakota.
2. "Child care provider" means a child care home, group, or center licensed by the
department of health and human services.
3. "Lender" means any lending institution that is regulated or funded under the laws of
this state or the United States and which has provided financing to a beginning
entrepreneur for the establishment of a qualified revenue-producing enterprise.
4. "Loan guarantee" means an agreement that in the event of default by a beginning
entrepreneur under a note and mortgage or other loan or financing agreement, the
Bank of North Dakota shall pay the lender the amount agreed upon up to a percentage
to be determined by the Bank of the amount of principal due the lender on a loan at
the time the claim is approved from the loan guarantee fund.
5. "Qualified revenue-producing enterprise" means any real property, buildings,
improvements on the property or to the buildings, any equipment located on the
property or in the buildings, and any personal property used or useful in connection
with a revenue-producing enterprise engaged in any industry or business not
prohibited by the Constitution of North Dakota or the laws of this state. The term does
not include an enterprise for which a person is eligible under section 6-09-15.5 or
chapter 6-09.8.
### § 6-09.15-02. Loan guarantee fund - Administration.

A beginning entrepreneur loan guarantee fund is created to be used by the Bank of North
Dakota to administer a beginning entrepreneur loan guarantee program to be used in
conjunction with other loan programs. The fund includes moneys appropriated by the legislative
assembly for administration of the program and all earnings, less any administrative charges,
from the investment of those moneys. The Bank may retain any administrative charges
necessary for the administration of the program established by this chapter. The fund is not
subject to section 54-44.1-11. The fund must be audited annually pursuant to section 6-09-29,
and the cost of the audit must be paid from the fund.
### § 6-09.15-03. Application for guarantee - Term - Annual fee.

A lender may apply to the Bank of North Dakota for a loan guarantee for a loan amount to
be determined by the Bank. The Bank may approve a guarantee of a loan of up to five thousand
dollars to a beginning entrepreneur for use by the beginning entrepreneur for accounting, legal,
and business planning and other consulting or advisory services in planning for the
establishment of a qualified revenue-producing enterprise. The Bank may approve a guarantee
of a loan of up to twenty-five thousand dollars to a beginning entrepreneur without requiring the
beginning entrepreneur to provide collateral for the loan. The term of a loan guarantee may not
exceed five years. The Bank may charge a lender an annual fee during the term of a loan
guarantee. Total outstanding guarantees under this program at the time of issuance may not
exceed five percent of the Bank's tier one capital as defined by the department of financial
institutions.
### § 6-09.15-03.1. Loan guarantee for child care facility.

A beginning entrepreneur who receives a loan for a child care facility must be a child care
provider.

### § 6-09.15-04. Termination.

The Bank of North Dakota may terminate a loan guarantee upon the sale, exchange,
assignment, or transfer of the beginning entrepreneur's interest in the qualified
revenue-producing enterprise. The Bank shall terminate a loan guarantee if the Bank
determines that the loan guarantee was obtained by fraud or material misrepresentation of
which the lender or seller has actual knowledge.
### § 6-09.15-05. Rules.

Notwithstanding any provision of this chapter, the Bank of North Dakota shall adopt rules to
implement this chapter. The rules may include a formula for determining the ratio of reserves in
the loan guarantee fund to the amount of guaranteed loans, the maximum dollar amount of a
guarantee, and the maximum allowable annual interest rate on a loan eligible for a guarantee.
