The REAP Grant: Rural Energy for America Program and Solar for Your Farm or Business
Updated: Oct 26, 2022
What is the REAP Grant?
The Rural Energy for America Program, or the REAP Grant, from the US Department of Agriculture, is a grant for agricultural businesses or small businesses in rural areas. If awarded, this grant will provide funds for 25% of the cost of your solar energy project. The REAP program also provides guaranteed loans, but we’re going to delve more into the grant side of this program. This grant is an exciting opportunity to cover a big portion of the cost of going solar for your farm or business!
Applying for a federal grant is a lengthy process and will take some effort. It is competitive, and even if you go through all of the work to apply for the grant, that doesn’t necessarily mean you’ll be awarded the money. However, you certainly won’t get any grant money if you don’t apply! New Farm Solar can assist you through this grant application process if you want to install solar. REAP grant funds can be used towards the installation of nearly any renewable energy system, and even energy efficiency upgrades, but of course, we are all about solar energy! As mentioned, grants are available for up to 25% of the cost of your project and loans are available for up to 75% of the cost. An even more exciting prospect is that you can combine the REAP grant with the federal tax credit of 30% for installing solar energy for your home or business! With those stacked together, 55% of the cost of your solar project is covered for you! You can read more about the solar tax credit in this previous blog.
Do I Qualify?
One must be a rural small business or an agricultural business to be eligible for this program. Small businesses, as defined by the USDA, must be located in an area with fewer than 50,000 residents in the population. You can check the USDA eligibility map to ensure that your business location qualifies. The USDA defines “small business” as having less than $750,000 income annually. Agricultural producers on the other hand can be located anywhere, even in highly urban areas. The only requirement for eligibility as an ag producer is that 50% of your gross income must come from agricultural operations to be eligible for a grant or loan with the REAP program. You will have to provide the last three years of tax returns to demonstrate this. Dairy farms, beef or poultry farms, tree farms, nurseries and greenhouses, aquaculture operations, and other animal or crop production all fall under the umbrella of agricultural production. The funds aren't unlimited. This competitive grant is scored with points. Scorers will compare all applications and those with the highest points will be awarded the money they requested. So even if you do qualify for the grant application, that doesn't guarantee you will be awarded grant money.
What is the Application Process Like?
There are quite a few documents to gather for the grant application. It’s important to be thorough in submitting all forms and required documentation, previous years’ incomes, and so on. This is a competitive grant and the scorers will look to see that everything is completed correctly, or your application won’t be considered. There are two rounds each year for the REAP grant. The first round of applications is submitted in October, and the second round of applications is submitted in March. For grants over $20,000, you are limited to applying to the second round in March.
Grant minimums for renewable energy projects are $2,500 and for energy efficiency improvements the minimum grant awarded is $1,500. The maximum request for renewable energies is $500,000 and $250,000 for energy efficiency improvements. This is quite a wide range of funding, but remember, these grants are for up to 25% of your total project cost. A REAP grant award for $50,000 would mean that your total project cost is $200,000. You will have to come up with the other $150,000 for the project. There is an entire portion of the grant scoring process that involves your demonstration of Commitment of Funds documentation. You must show that the rest of the money is available to fund your project if awarded this grant. With the grant scoring process, the commitment of funds documentation is the most important (worth the most points). Whether it be a bank statement, proof of loan, or otherwise, you have to sufficiently demonstrate you can pay for the other 75% of the project cost.
There is a pre-registration process that must be completed before completing an application, and this could take some time. Two identifying numbers will be assigned to you for this step. You will first need to apply for a Unique Entity ID. You can apply for that number for free here on the SAM.gov website. The SAM (System for Award Management) Cage Code is another number identifier that you must apply for that will enable you to receive a reward from the government if you are awarded grant money. Before applying for a SAM code, you must have a Unique Entity ID number. The SAM CAGE code will be obtained from the same website www.sam.gov.
In summary, the following information will be needed for the grant application:
Federal ID numbers - Unique Entity ID and SAMS Cage Code
Contractor proposal (New Farm Solar will work with you on design and we do this part for you) along with technical specifications sheets of the solar equipment
Past 3 years of tax returns
The commitment of funds documentation
Feasibility study if your project is greater than $200,000
Other forms per the USDA
Per the USDA website, “This program helps increase American energy independence by increasing the private sector supply of renewable energy and decreasing the demand for energy through energy efficiency improvements. Over time, these investments can also help lower the cost of energy for small businesses and agricultural producers.” Though this is a competitive grant, farms and small, rural businesses should consider applying to take advantage of these available grant funds. New Farm Solar will help you through this application process if you choose us as your solar energy installer. Your State Rural Development Energy Coordinator, as well as local USDA offices that can be contacted with questions, as well! Applications are currently open for the fiscal year 2023. The first round of applications is due October 31, 2022, and the second round is due March 31, 2023.
The USDA REAP webpage has all of the requirements and application forms available, as well as information on how to contact your state’s Rural Development Energy Coordinator. For a free quote from New Farm Solar, visit our homepage and fill out your information. Just click on "Request a Free Quote". From there we can get started with the REAP application process after we’ve determined the energy needs for your agricultural operation or business.