USDA REAP Grant

Boosting Rural Prosperity Through Renewable Energy

What is USDA REAP Grant?

The U.S. Department of Agriculture (USDA) Rural Energy for America Program (REAP) is designed to foster the development of clean energy projects in rural communities. The program offers a combination of guaranteed loans and grants to agricultural producers and small businesses in eligible rural areas. The program offers a combination of guaranteed loans and grants to agricultural producers and small businesses in eligible rural areas.

Eligibility Criteria

Agricultural producers with at least 50% of gross income from agricultural operations.
Small businesses in eligible rural areas. (See map for details)
Businesses must be located in rural areas with populations of 50,000 or fewer.
Agricultural producers can be situated in rural or nonrural areas.

Example Financial Proforma

System Cost	$1,000,000
State Incentives	- $15,000
Out of Pocket Cost	$985,000
30% ITC	- $295,500
50% REAP*	- $492,500
Net System Cost**	$197,000

Financial Summary

Over 80% of the system cost can be covered with incentives paired with the REAP Grant. The typical payback period on these projects is about 3-5 years when you consider the energy savings created by the system. This can be even shorter after MACRS or additional ITC bonus credits. The equipment for these systems is often warrantied for 25 years. That’s over 20 years of massive, hassle free, energy savings

Program Objectives

REAP aims to enhance rural energy sustainability by offering guaranteed loan financing and grant funding for the installation of renewable energy systems and energy efficiency upgrades. These initiatives contribute to increased energy independence, reduced energy demand, and potential cost savings for small businesses and agricultural producers.

Approved Uses of Funds

Funds can be utilized for renewable energy systems (biomass, geothermal, hydropower, hydrogen, wind, solar, ocean) and energy efficiency improvements (HVAC systems, insulation, lighting, cooling units, doors/windows, irrigation equipment).

Eligibility Criteria

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

50% of the system cost up to $1MM can be covered by the REAP Grant!

Borrowing Restrictions

Individual borrowers must be U.S. citizens or legal permanent residents.
Private-entity borrowers must demonstrate that loan funds will remain in the U.S.
Applicants must have no outstanding delinquent federal taxes, debt, judgment, or debarment.

Program Oversight

The program is governed by specific regulations for grants and guaranteed loans, and it is authorized by Title IX of the Agricultural Improvement Act of 2018 and the Inflation Reduction Act of 2022.

USDA Rural Development aims to enhance American energy independence by bolstering the private sector’s supply of renewable energy and decreasing energy demand through efficiency improvements. The long-term impact includes potential cost reductions for small businesses and agricultural producers.