Attention California Ag Producers: REAP funds can be used to help those impacted by California's drought. Projects to assist with irrigation, such as energy efficient pumps, may be eligible for funding. Contact us to learn more!
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 with at least 50 percent of their gross income coming from agricultural operations.
- Small businesses in eligible rural areas.
NOTE: Agricultural producers and small businesses must have NO outstanding delinquent federal taxes, debt, judgment or debarment.
Who may qualify for loan guarantees?
Eligible borrowers are:
- Rural small businesses.
- Agricultural producers.
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?
- Businesses must be in located in rural areas with populations of 50,000 residents or less.
- Check eligible business addresses.
- Agricultural producers may be in rural or non-rural areas.
How may the funds be used?
Funds may be used for 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.
- Small and large wind generation.
- Small and large solar generation.
- Ocean (tidal, current, thermal) 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).
- 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.
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 40 percent of total eligible project costs.
- Combined grant and loan guarantee funding up to 75% of total eligible project costs.
What is the maximum amount of a loan guarantee?
The loan guarantee percentage is published annually in a Federal Register notice. REAP loans approved in Fiscal Year 2023 will receive an 80 percent guarantee.
What are the loan guarantee terms?
The lender, with Agency concurrence, will establish and justify the guaranteed loan term based on the use of guaranteed loan funds, the useful economic life of the assets being financed and those used as collateral, and the borrower’s repayment ability. The loan term will not exceed 40 years.
What are the interest rates for the loan guarantee?
- Interest rates are negotiated between the lender and borrower.
- Rates may be fixed or variable.
- Variable interest rates may not be adjusted more often than quarterly.
What are the applicable fees for the loan guarantee?
- There is an initial guarantee fee, currently 1 percent of the guaranteed amount.
- There is a guarantee retention fee, currently 0.25 percent of the outstanding principal balance, paid annually.
- Reasonable and customary fees for loan origination are negotiated between the borrower and lender.
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 at least 60 percent of the project cost if applying for a grant only.
- 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.
How do we get started?
Applications for this program are accepted year-round at your local office.
Who can answer questions?
Contact your State Rural Development Energy Coordinator.
What law governs this program?
- Grants – Code of Federal Regulation, 7 CFR Part 4280 -- Loans and Grants
- Guaranteed Loans – Code of Federal Regulation, 7 CFR 5001.
- This program is authorized by Title IX of the Agricultural Improvement Act of 2018, (2018 Farm Bill).
Why does USDA Rural Development do this?
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.
NOTE: Because citations and other information may be subject to change, please always consult the program regulations listed in the section above titled “What law governs this program?” You may also contact your local office for assistance.
NOTE: Please select your state in the dropdown menu above to find the state office contact information and speak to a program specialist before attempting to fill out any forms or applications. This will save you time in completing your application.
Rural Development has implemented the OneRD Guarantee Loan Program, view full program information at https://www.rd.usda.gov/onerdguarantee.
NOTE: If state specific forms are not shown above, please refer to the forms listed below to start the process of applying for a grant. Please speak to a Rural Development Energy Coordinators before attempting to fill out any forms or applications. This will save you valuable time in the process.
To complete an application for this program, you must be pre-registered with the System for Award Management (SAM) and also have a Unique Entity ID. Neither of these applications cost money, but they can take time so be sure to get this taken care of right away. If you are already registered with these systems, you do not need to do it again.
Program Regulation (pdf)
If you are using Google Chrome, your browser settings may require you to first download the form and then open the form.
- Application for Federal Assistance - Form SF-424 (pdf)
- Budget Information - Construction Programs - Form 424-C (pdf)
- Assurances: Construction Programs - Form 424-D (pdf)
- Application for Total Project Costs of $80,000 or less (pdf) | Instructions
- Application for Total Project Costs of less than $200,000 but more than $80,000 (pdf) | Instructions
- Application for Total Project Costs of $200,000 or greater (pdf) | Instructions
- Request for Environmental Information - Environmental Checklist
- Renewable Energy Systems Vendor Certification
- Energy Efficiency Improvement Vendor Certification
• USDA Energy Investment Map
• USDA Energy Matrix
There are no additional requirements at the national level. If there are additional state-specific requirements related to the environmental review, the state will advise.
Main Phone Number: (530) 792-5800
USDA Rural Development
Attn: Business & Cooperative Programs
430 G St, Agency 4169
Davis, CA 95616
Dan Johnson, California Business & Cooperative Programs Director
John Strauch, Energy Coordinator
(530) 233-4137 x113
Jose Arroyo, Business & Cooperative Program Specialist
(209) 287- 3630