Rural Energy for America Program (REAP) Frequently Asked Questions
For FY2015 you can find more information here.
- What is the Rural Energy for America Program (REAP)?
- Where Can I Find the Funding Notice?
- How Much Funding is Available?
- What is a Guaranteed Loan?
- What is a Grant-Guaranteed Loan Combination?
- What Fee is Charged for a Guaranteed Loan?
- What Are the Minimum/Maximum Grant Amounts?
- What Are the Minimum/Maximum Guaranteed Loan Amounts?
- Who Do I Contact with Additional Questions?
- How Can I Stay Informed on the Status of the Program?
- Who Is Eligible for Funding?
- What Is a Rural Small Business?
- What Types of Projects are Eligible?
- What Types of Projects are Not Eligible?
- When are Applications Due?
- What Type of Application is Required?
- Can I Submit my Application Electronically?
- Do I Have to Perform an Environmental Review?
- How Will USDA Evaluate My Proposal?
Rural Energy for America Program (REAP) Background
What is the Rural Energy for America Program (REAP)?
REAP, or the Rural Energy for America Program, (formerly known as “Section 9006” in the 2002 Farm Bill, but now renumbered Section 9007 of the 2008 / 2014 Farm Bills) is part of the Energy Title of the 2014 Farm Bill. It provides grants and loan guarantees to agricultural producers and rural small businesses to help purchase renewable energy systems, make energy efficiency improvements and perform renewable energy feasibility studies. It also funds an energy audit and technical assistance program to serve ag producers and rural small businesses.
Where Can I Find the Funding Notice?
Updated for 2015. A Notice of Funding Availability (NOFA) for grants and loan guarantees for the 2015 program is expected soon. You can find the 2015 funding notice here . You can find final program rules here, which form the basis for the funding notice.
How Much Funding Is Available?
Updated for 2014 and 2015. Release of the mandatory funding for FY2014 was delayed and has been combined with FY2015 mandatory, plus discretionary funding, for a total of $101.35 million. For Energy Audits and Renewable Energy Development Assistance, the legislative limit is 4% of mandatory funding, which is $4 million for FY2014 and FY2015. (Deadline now passed for 2015)
What is a Guaranteed Loan?
A guaranteed loan protects your lender against a portion of the value of a loan in the event of a default. In essence, USDA Rural Development is guaranteeing repayment of a portion of your loan. Further information may be found below.
What is a Grant-Guaranteed Loan Combination?
An applicant may apply for a combined grant and guaranteed loan combination for the same project. This requires two applications and the loan guarantee application still needs to be submitted by your lender. However, USDA now has an official combination application that allows them to evaluate the loan guarantee and grant together.
What Fee is Charged for a Guaranteed Loan?
The USDA charges guaranteed loan origination and annual fees, paid by the borrower, to offset the upfront and ongoing costs of monitoring compliance with the terms of the guarantee. The origination fee is 1% of the guarantee amount and the annual renewal fee is 0.25% of the guaranteed portion of the loan.
What Are the Minimum/Maximum Grant Amounts?
For energy efficiency projects, the minimum grant amount is $1,500 and the maximum grant amount is $250,000. For renewable energy systems, the minimum grant amount is $2,500 and the maximum grant amount is $500,000. No person or entity can receive more than $750,000 from multiple projects in any one year.
What Are the Minimum/Maximum Guaranteed Loan Amounts?
The minimum guaranteed loan is $5,000 and the maximum loan guarantee is $25 million. A guaranteed loan can cover up to 75% of eligible project costs and up to 85% of the loan amount for loans under $600,000, declining to 60% for loans from $10-25 million.
Who Do I Contact with Additional Questions?
You can find a listing of state USDA Rural Development Energy Coordinator contacts, here. They can assist you with program details and the application process. For the best results anyone considering applying under the REAP program should make contact with your Rural Development Energy Coordinator early.
How Can I Stay Informed on the Status of the Program?
To join our e-mail list-serve on REAP and related agricultural energy issues, click here. We will not share your e-mail address with other organizations.
Who Is Eligible for Funding?
The program is open to agricultural producers and rural small businesses, including rural electric cooperatives. To be eligible, you must be actively involved in the business and the proposed project. With the new final rule issued in December 2014, it is no longer required to show a “demonstrated financial need” for grant funding. Farmers must derive the majority of their income from farming.
What Is a Rural Small Business?
The definition of “small business” is based on the Small Business Administration’s criteria (the 7A and the SBA 504 programs, as found in 13 CFR 121.301(a) and (b)). To determine if your business qualifies, see this Small Business Association (SBA) link to check a check size qualifications by business category.
- “Rural” means a community of fewer than 50,000 people not located within a larger metropolitan area. To determine whether a potential project is in a rural area, use the rural area determination map.
What Types of Projects are Eligible?
Energy Efficiency: Any projects that save energy (electricity, propane or natural gas, or diesel fuel) are eligible. Examples include dairy pumps and cooling systems, weatherization of poultry houses, efficient lighting and ventilation, irrigation equipment, industrial motors and supermarket refrigeration systems. Projects that save fuel used in mobile sources (tractors, trucks) are not eligible.
Renewable Energy: Renewable energy systems can include small and large wind turbines, active or passive solar energy systems, geothermal heating and cooling, anaerobic digesters using food or livestock waste, systems using or producing biomass fuels, or facilities producing ethanol or biodiesel. Under the 2008 Farm Bill, tidal, wave, ocean thermal and hydroelectric technologies are also included.
What Types of Projects are Not Eligible?
Energy efficiency grants cannot be used for costs to expand facilities. The grant can only be used for identifiable energy efficiency improvements such as lighting, heating, refrigeration, motorized equipment or insulation. Grants cannot support agricultural equipment or other vehicles. For renewable energy systems, only proven, commercially available and pre-commercial technology is eligible. Grants cannot fund research and development activities. No part of a renewable energy project can be applied for residential use. An exception to this would be where a rural small business owns the systems located on the residence, such as solar panels owned by a Rural Electric Cooperative on residences.
When are Applications Due?
There are two deadlines remaining for 2015. Applications must be submitted to the state office by April 30 to compete for the set aside for grants of $20,000 or less. All applications must be submitted by June 30 to compete in 2015 (regardless of size). Applicants should contact their USDA state energy coordinator early. While state energy coordinators have less time to assist closer to the deadline, they can help you, review your application and so you can address gaps prior to the deadline.
What Type of Application is Required?
The 2014 Farm Bill established a new three-tier system to provide for simpler applications as total project costs diminish. The first tier is for projects of total project cost of $80,000 or less. The second tier is for total project cost between $80,000 and $200,000 and the third tier is for total project cost over $200,000.
Can I Submit my Application Electronically?
Do I Have to Perform an Environmental Review?
Because the grants are funded with federal money, all projects are subject to environmental impact assessments. Be sure to advise your state USDA office early of your intent and allow sufficient time for them to conduct this environmental assessment in the application process.
How Will USDA Evaluate My Proposal?
Paying close attention to the point scoring rules is critical for competing for grant funds. We strongly recommend people self-score their proposals using the evaluation criteria described in the rule in §4280.120. Total possible points are now 100. This section is complex and applicants should review the rule for further details.
- Environmental benefits are now a total of five points, based upon addressing resource conservation (e.g., water, soil, forest), public health and the environment (e.g., compliance with EPA’s renewable fuel standard(s), greenhouse gases).
- Energy generated, replaced, or saved is worth 25 points. Changes include evaluating projects by BTU saved or generated per dollar of REAP grant.
- Commitment of funds is worth a total of 20 points, based upon the percentage of funds that have a written commitment.
- Size of Agricultural Producer or Rural Small Business is worth a total of 10 points, based a sliding scale of the actual size compared to the maximum allowable size.
- Previous grantees and borrowers allows a maximum of 15 points for those who have not previously received a REAP award and declining based upon when the previous award was received.
- Simple payback calculations allow a maximum of 15 points.
- State Director and Administrator priority points provide a maximum of 10 points for factors such as technological and geographic diversity, economically distressed areas or policy priorities.