What Is A USDA REAP Grant?
The Rural Energy for America Program (REAP) Grant funds rural small businesses and agricultural producers across the United States to help them adopt renewable energy systems or improve energy efficiency. Eligible applicants may receive grants covering up to 50% of their solar project costs. However, approval and funding amounts are determined solely by the USDA.
Limited Funding & Program Changes – Stay Informed
USDA REAP Grants remain a valuable opportunity for Maine businesses and agricultural producers, but funding is shrinking, competition is increasing, and program changes are occurring based on USDA allocations. If you’re considering applying, staying current on evolving eligibility requirements and funding is important.
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. If You Are A 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.
2. If You Are A Farm:
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 must 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 duration of the solar project. - 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 a home is on your property and shares a meter with your business or farm, 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.
Grant Application Deadlines:
- The final REAP Inflation Reduction Act (IRA) deadline for fiscal year 2025 is December 31, 2024, at 4:30 p.m. local time.
- IRA applications are considered any application requesting grant funding of more than 25% of the total project costs.
- This includes both the Unrestricted and under $20K competitions.
- IRA applications received after the deadline will be returned to the applicant.
- USDA anticipates accepting REAP IRA applications again starting July 1, 2025, for Fiscal Year 2026 funding.
Some Tips:
- Please submit any IRA applications for the December 31st competition as soon as possible. This will be a quick turnaround, so the sooner the USDA can review the applications, the better.
- Funding in the Unrestricted IRA competition is significantly lower than in past competitions. The Agency will likely only be able to fund a handful of applications. The USDA recommends applying for the under $20,000 competition.
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.
- The USDA’s website is a great place to start if you want to learn more. It looks dense, but it provides an excellent overview.
- Please inform your solar consultant if you intend to apply for a REAP grant. Our team can provide recommendations for grant writing services and is highly knowledgeable about REAP grants. We can furnish you with all the specific solar project specifications you will need to complete your grant application successfully and have a working checklist for you with helpful tips.
- Visit the program website for additional information and see the “To Apply” tab for the application documents. Please send specific questions to Katrina Shaw:
Katrina Shaw, Business and Cooperative Programs Loan Technician, at 207-990-9129 or email her at Katrina.Shaw@usda.gov. - The USDA determines all funding decisions, eligibility requirements, and application approvals, not Maine Solar Solutions.
