The North Dakota Industrial Commission has approved a new Bank of North Dakota loan program for ethanol plants, who have been hit hard by the drop in demand due to the coronavirus pandemic.
The “Ethanol Recovery Program” will provide loans to ethanol plants at one percent interest rates. The loans would be administered through local banks, and the loans would be backed up by the Strategic Investments and Improvements Fund. It would be similar to the “PACE” fund, which is an interest rate buy-down program.
Bank of North Dakota president Eric Hardmeyer told the Commission the ethanol industry had asked for some kind of loan forgiveness, but he said the industry seems to be comfortable with this concept.
"I believe this does provide them the lifeline they need to get to the other side of this," Bank president Eric Hardmeyer told the Commission.
Bank Chief Business Development Officer Todd Steinwand said the ethanol producers have told the Bank they’re cutting costs to be efficient, and won’t access the loan funds unless they truly need it. He said on a $15 million loan, with PACE applied, the producers would see about 18 months at one percent interest.
"They're hopeful that's enough time for gas prices, and this COVID thing, to be over, and get back to a new normal," Steinwand said.
North Dakota Agriculture Commissioner Doug Goehri, a member of the Industrial Commission, said nationally, about 40 percent of ethanol plants have been idled. He said he thinks this will help the industry hang on in North Dakota.
"This is a $600 to $800 million direct and indirect impact in North Dakota," said Goehring. "The industry is consuming about 150 million bushels of corn. It is the state's largest value-added sector in agriculture."