What Is A USDA REAP Grant?
The Rural Energy for America Program, better known as the REAP Grant, provides grant funding to rural small businesses and agricultural producers across the United States to implement renewable energy systems or improve overall energy efficiency.
With the passage of the Inflation Reduction Act in 2022, the Rural Energy for America Program (REAP) received $2 billion for renewable energy systems and energy efficiency improvement grants. With this additional funding, eligible applicants can now request the grant to cover 50% of project costs.
Does My Business Or Farm Qualify For A REAP Grant?
Two groups can apply for REAP benefits: rural small businesses in eligible locations and agricultural producers who earn at least 50% of their gross annual income from farming operations.
1. Rural Small Business:
A rural location is defined as anywhere with less than 50,000 people. If you are in a rural area, it doesn’t matter what your business is. It could be a clothing boutique, hardware store, or Blacksmithing shop. It is important to note that agricultural producers may be in rural or non-rural locations.
You can use the USDA Eligibility Map to check your business address online to determine eligibility.
If you aren’t confident whether your business is legally defined as a “small” business, you can check your NAICS code at the NAICS website. You can also check your Small Business Administration (SBA) defined business size on the SBA website.
The good news is that farms have no size or geographical restrictions. You can be a large farm in the country or a small farm in the city. You do not need to meet any of the “rural small business” requirements noted above.
However, those applying as a Farm will need to prove that more than 50% of their household income comes from selling agricultural products. If this is not the case, your farm business must be considered eligible as a “rural small business” and apply that way.
For Both Groups To Be Considered, USDA REAP Grant Applicants Must:
- Be Financially Solvent.
You must show that your business produces enough revenue to cover any project’s operational or maintenance expenses. You must also show that you can cover any applicable debt for the solar project’s duration.
- Not Have Outstanding Federal Taxes Or Be Delinquent.
- Be The Owner Of The Business.
Only the owner of the company can apply for a REAP grant. You don’t need to own your business’s location (the building or the property), but you must control that property.
- Only Your Business Can Qualify.
Residences (houses) are not eligible for the grant, even if they are on the same property as your business (an adjacent home, for example). If that is the case, you must demonstrate that 50% or more of the energy benefits resulting from the project will be used for your business. We have tools we will share to help you determine this.
- Have No Judgment Or Debarment To Be Considered.
A Few More Notes About REAP Grants
- Grants to fund the installation of Solar Renewable Energy cover up to 50% of the cost of your solar project. It doesn’t mean you will win the entire 50%.
- The IRS considers REAP grants taxable income; the recipient will receive Form 1099.
- To learn more, the USDA’s website is a great place to start. It looks dense, but it’s an excellent overview.
- If you intend to apply for a REAP grant, please inform your solar consultant. Our team can provide recommendations for grant writing services, and we are highly knowledgeable about REAP grants. We will be able to furnish you with all the specific solar project specifications you will need to successfully complete your grant application.