Application Deadline Reminder: Rural Energy for America Program (REAP) on September 30, 2024

What does this program do?

The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. Agricultural producers may also apply for new energy efficient equipment and new system loans for agricultural production and processing.

Who may apply for this program?

Agricultural producers
- An entity directly engaged in production of agricultural products where at least 50 percent of their gross income coming from agricultural operations.
Small businesses
- Must be located in eligible rural areas and one of the following:
  - Private for-profit entity (sole Proprietorship, Partnership, or Corporation)
  - A Cooperative [including those qualified under Section 501(c)(12) of IRS Code]
  - An electric utility (including a Tribal or governmental electric utility) that provides service to rural consumers and operates independent of direct government control)
  - A Tribal corporation or other Tribal business entities that are chartered under Section 17 of the Indian Reorganization Act (25 USC 477) or have similar structures and relationships with their Tribal entity without regard to the resources of the Tribal government
- Must meet the Small Business Administration size standards in accordance with 13 CFR 121

NOTE: Agricultural producers and small businesses must have NO outstanding delinquent federal taxes, debt, judgment or debarment.

What are the borrowing restrictions for loan guarantees?

Individual borrowers must be citizens of the United States or reside in the U.S. after being legally admitted for permanent residence
Private-entity borrowers must demonstrate that loan funds will remain in the U.S

What is an eligible area?

Projects must be located in rural areas with populations of 50,000 residents or less*
Check eligible rural areas

Agricultural producers may submit projects to be located in non-rural areas as long as the project is associated with an on-site production operation.

How may the funds be used?

Funds may be used for the purchase and installation of renewable energy systems, such as:

Biomass (for example: biodiesel and ethanol, anaerobic digesters, and solid fuels)
Geothermal for electric generation or direct use
Hydropower below 30 megawatts
Hydrogen
Small and large wind generation
Small and large solar generation

Funds may also be used for the purchase, installation and construction of energy efficiency improvements, such as:

High efficiency heating, ventilation and air conditioning systems (HVAC)
Insulation
Lighting
Cooling or refrigeration units
Doors and windows
Electric, solar or gravity pumps for sprinkler pivots
Switching from a diesel to electric irrigation motor
Replacement of energy-inefficient equipment

Energy Efficiency Improvement applications must contain an Energy Audit, or Energy Assessment (depending on Total Project Costs) that complies with Appendix A to RD Instructions 4280-B.

Agricultural producers may also use guaranteed loan funds to install energy efficient equipment and systems for agricultural production or processing.

What funding is available?

Loan guarantees on loans up to 75 percent of total eligible project costs
Grants for up to 50 percent of total eligible project costs
Combined grant and loan guarantee funding up to 75% of total eligible project costs

What are the underwriting requirements for the loan guarantee?

The lender will conduct a credit evaluation using credit documentation procedures and underwriting processes that are consistent with generally accepted prudent lending practices and also consistent with the lender’s own policies, procedures and lending practices.
The lender’s evaluation must address any financial or other credit weaknesses of the borrower and project and discuss risk mitigation requirements.
The lender must analyze all credit factors to determine that the credit factors and guaranteed loan terms and conditions ensure guaranteed loan repayment.
Credit factors to be analyzed include but are not limited to character, capacity, capital, collateral, and conditions.

What are the grant terms?

Renewable Energy System Grants:

$2,500 minimum
$1 million maximum

Energy Efficiency Grants:

$1,500 minimum
$500,000 maximum

Are there additional requirements?

Applicants must provide matching funds if applying for a grant only.
- 50% Federal grant share limited to projects that meet one of the following:
  - Project is a Renewable Energy System (RES), or RES retrofit that produces zero greenhouse gas emissions (Carbon Dioxide, Methane, Nitrous Oxide, or Fluorinated Gases) at the project level.
  - Project is located in an Energy Community as defined in 26 USC 45(b)(11)(B) and determined by the Department of the Treasury.
  - Project is an Energy Efficiency Improvement (EEI).
  - Is a project proposed from an eligible Tribal Corporation or other Tribal Business entity (including agriculture operations) as described in 7 CFR part 4280.
- All other projects are limited to 25% Federal grant share
Applicants must provide at least 25 percent of the project cost if applying for loan.
All projects must have technical merit and utilize commercially available technology.
Energy efficiency projects require an energy audit or assessment.
All projects require an environmental review prior to award or construction