Forum editorial: Bank of North Dakota entrepreneur program falls short
The Bank of North Dakota recently announced a new lending initiative for entrepreneurs at a 1 Million Cups gathering of business people at the Stage at Island Park. Eric Hardmeyer, president of the state-owned Bank of North Dakota, said the bank will devote $1.5 million toward seed capital for entrepreneurs. The intent of the program is not for the bank to become a primary investor, but to provide money to help close the financing gap entrepreneurs often face in trying to expand their businesses.
The effort, though well-intended, is underwhelming. Frankly, the audience of entrepreneurs at the 1 Million Cups gathering must have been disappointed. At a mere $1.5 million, the entrepreneurial seed program couldn't fill a thimble, let alone a million cups. It's a laughable sum of money that just won't move the needle.
The funding source is a $15 million fund the bank uses in tandem with its development fund. To put these amounts in perspective, consider that last year the Bank of North Dakota generated profits of $136.2 million, outpacing the previous year's $130.7 million profit, and the thirteenth consecutive year of profits for the bank. More context: the Bank of North Dakota, the nation's only state-owned bank, last year had a loan portfolio of $4.79 billion and $7.3 billion in assets.
In short, the Bank of North Dakota can do more for the state's entrepreneurs. Much more. Recall that the mission of the bank is unique. It was created in 1919, as part of a populist reform agenda, with the explicit purpose of helping to develop the state's struggling economy. The bank's mission is to promote the "development of agriculture, commerce and industry in North Dakota."
In fact, the bank is doing a good job of fulfilling its mission, as its muscular loan portfolio shows. But Hardmeyer and his colleagues should be more bold and visionary in creating programs to help the state's entrepreneurs. Why not $150 million? It's important to remember that lending programs, including the anemic seed capital program for entrepreneurs, are loan programs, not grants. Nobody's giving any money away here. These are smart bets, vetted by reviewers, that the financial assistance will be repaid, with interest.
To help entrepreneurs, the Bank of North Dakota could tap the expertise of business leaders who are on the cutting edge to serve on a blue-ribbon advisory panel, people such as Howard Dahl, the co-founder of Amity Technology; Garrett Moon, CEO and co-founder of CoSchedule, an innovative marketing calendar; Jake Joraanstad, CEO of Myriad Mobile; Michael Solberg, president and CEO of Bell State Bank and Jim Wieland, a GOLDMARK founder.
North Dakota leaders have to work to ensure that the Bank of North Dakota serves as the strong economic development tool envisioned by earlier generations of leaders. They must be prepared to invest meaningful sums that have the potential to really build and diversify the economy. That's a priority that should resonate with Gov. Doug Burgum's pledge to reshape the state's economy.
Editorials represent the views of Forum management and the Editorial Board.