North Dakota Small Business Grants 2026
North Dakota's state funding programs are compact but strategic, anchored by the Bank of North Dakota — the only state-owned bank in the U.S. — and supplemented by deep federal rural development and R&D resources that every ND business can access.
Start with the federal SBIR/STTR program if you do R&D — it's the largest non-dilutive grant source available to any ND technology or agtech company. For financing an expansion or workforce investment, Bank of North Dakota's Flex PACE program reduces your interest rate on a conventional commercial loan. Pair either with the federal Section 41 R&D tax credit to reduce your tax bill on qualifying research spend.
The funding landscape in North Dakota
North Dakota's state-level business incentive toolkit is leaner than larger states, but what exists is substantive. The Bank of North Dakota (BND) — a state-owned institution chartered in 1919 — is the anchor. Its PACE (Partnership in Assisting Community Expansion) loan program provides interest-rate buy-downs channeled through local banks, reducing borrowing costs for businesses creating or retaining jobs, investing in equipment, or expanding operations. The Flex PACE variation adds workforce training as an eligible use, making it one of the few state programs that directly subsidizes employee skill development. BND also participates in SBA 7(a) and SBA 504 loans alongside community banks, so the state bank infrastructure meaningfully extends the reach of federal small business lending statewide.
For businesses outside the financing track, the federal funding landscape is where the serious money is. Any ND small business conducting qualifying research — in agtech, energy technology, advanced manufacturing, or software — can apply directly to federal SBIR programs at NSF, USDA NIFA, DOE, or NIH. Phase I awards run up to $200K–$305K depending on the agency; Phase II can reach $1M–$2M. USDA Rural Development operates actively in North Dakota and is the right entry point for rural businesses needing capital infrastructure, broadband connectivity (via the Distance Learning and Telemedicine grant), or agricultural processing expansion. The USDA Rural Energy for America Program (REAP) is particularly relevant for ND farms and agribusinesses with energy efficiency or renewable energy projects.
North Dakota programs 4
State-administered grants, tax credits, and incentives for businesses based in North Dakota.
Innovate ND Entrepreneurship Grant
Up to $50K in reimbursable validation grants for ND entrepreneurs across two 6-month phases, paired with coaching from regional entrepreneur centers.
Empowerment Zone Employment Credit
20% credit on up to $15K wages per qualifying EZ employee. Authorized through Dec 31, 2025 — lapsed for 2026 absent new legislation.
North Dakota Flex PACE Workforce Training Fund
ND state interest buy-down on BND PACE loans — reduces borrowing cost for ND businesses investing in workforce, equipment, or expansion.
Xcel Energy Business Equipment and Efficiency Rebates
Cash rebates for Xcel Energy commercial customers across 8 states — lighting, HVAC, refrigeration, motors; prescriptive and custom tracks; Xcel covers up to 75% of energy study costs.
Federal & national programs North Dakota businesses can use
These programs are open to qualifying small businesses in every state, including North Dakota — often the largest non-dilutive dollars available.
SBIR Phase I — U.S. Air Force / AFWERX
Air Force SBIR Phase I — up to $250K via traditional topics or AFWERX Open Topics (continuously open). STRATFI/TACFI bridge Phase I to Phase II.
SBA 7(a) Loan Program
SBA's flagship loan guarantee — up to $5M for almost any business purpose through an SBA-approved bank or lender.
SBA Microloan Program
Loans up to $50K for startups and small businesses through local nonprofit lenders. Average loan ~$13K. Apply to a local intermediary, not SBA directly.
Research & Development Tax Credit (Section 41)
Federal R&D credit offsetting up to $500K/yr in payroll taxes for early-stage companies with qualifying research spend.
SBA 504/CDC Loan Program
Fixed-rate financing up to $5.5M for owner-occupied real estate and heavy equipment — as little as 10% down, 25-year terms.
SBIR Phase I — USDA (NIFA)
Up to $175K USDA feasibility grant for ag-tech, food, forestry, and rural innovation startups — one annual solicitation, submitted via Grants.gov.
How to apply in North Dakota
For state programs, contact the Bank of North Dakota directly or work through your local commercial bank, which participates as a PACE partner lender — BND does not originate loans directly to businesses. For federal SBIR funding, register at SAM.gov and search active solicitations at sbir.gov; NSF and USDA NIFA both have rolling or annual windows. USDA Rural Development has a ND state office in Bismarck that handles B&I loan guarantees, REAP, and community facilities programs — contact them early, as applications require a business plan and financial projections.
North Dakota small business funding FAQ
Does North Dakota have a state grant program for small businesses?
North Dakota does not operate a broad-based state cash grant program for general small businesses. The primary state tools are interest-rate subsidies through the Bank of North Dakota PACE program and community development infrastructure grants channeled through local governments. The most significant non-dilutive cash grants available to ND companies are federal — primarily SBIR/STTR for R&D-active businesses and USDA programs for rural and agricultural operations.
What federal programs are best suited for North Dakota's ag and energy sectors?
USDA SBIR Phase I (up to $175K) targets agricultural research and rural technology. USDA REAP provides grants up to $1M for renewable energy systems and energy efficiency upgrades at farms and rural businesses. USDA Value-Added Producer Grants (up to $250K working capital) help ND producers who process or market their own commodities. For energy technology companies, DOE EERE funding opportunity announcements are the primary avenue.
Can a North Dakota startup use the federal R&D tax credit?
Yes. The federal Section 41 R&D tax credit allows companies with qualifying research expenses to offset up to $500K per year in payroll taxes — even if the startup has no income tax liability yet. This payroll tax offset option is specifically designed for early-stage companies. North Dakota does not have a state-level R&D tax credit, so the federal credit is the primary tool.
How does the Bank of North Dakota's PACE program work in practice?
BND's PACE program works by buying down the interest rate on a loan your local community bank originates. The business applies through a participating local bank; BND then purchases a participation in the loan and reduces the interest rate — typically by 1–5 percentage points depending on the loan purpose (job creation, workforce training, or infrastructure). There is no separate state application to BND; your commercial banker initiates the process.