Rural Energy for America Program (REAP) Loan Guarantees and Grants

Description

The program provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses to install renewable energy systems or to make energy efficiency improvements.

Eligibility

• Small businesses, as defined by the Small Business Administration’s (SBA) small business size standards NAICA code. Small businesses must be in eligible rural areas with populations of 50,000 residents or less 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.
• Agricultural producers with at least 50% of their gross income coming from agriculture operations
• Both agricultural producers and small businesses must have NO outstanding delinquent federal taxes, debt, judgments, or debarment.
• Small business can use the Rural Business Services database to determine if the business is located in an eligible area (agricultural producers in rural or non-rural areas are eligible).

How the Program Works

Rural small businesses or agricultural producers can apply to REAP for either grants or loan guarantees to improve the efficiency of existing energy-using operations or to install new renewable energy systems. Agricultural producers may also apply for new energy efficient equipment and new system loans for agricultural production and processing.

The amount of federal assistance available is as follows:

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

Under the program, project developers work with local lenders, who in turn can apply to the USDA Rural Development for a loan guarantee. The applicable terms of the loan guarantee include:

• REAP loans approved in Fiscal Year 2023 will receive an 80% guarantee.
• Initial guarantee fee equal to 1% of the guaranteed amount.
• There is a guarantee retention fee, currently 0.25 percent of the outstanding principal balance, paid annually. Loan interest rates are negotiated between the lender and borrower.

How to Apply

The USDA recommends applicants contact their state Rural Development Energy Coordinator (listed below) before filling out any application materials.

For grants, applicants must be pre-registered and have Unique Entity ID number. Neither of these applications cost money, but they can take time.

Contact Information

New York’s Rural Development Energy Coordinator:
Gary Pereira, USDA Rural Development
(315) 570- 2233
Gary.pereira@usda.gov