Solar power and off-grid capabilities can be game-changing for agricultural producers and small businesses, especially those in rural areas. Tapping into renewables makes sense for sustainability, better reliability, and reduced operating costs, particularly as energy costs rise. But, transitioning to more efficient, self-sustaining systems requires investment. There are virtually endless ways to put money back into your small business, family farm, or ranch. The cost of a solar mount or new insulation may not rise to the top of your list, particularly if you’re covering 100% of the bill.
The Rural Energy for America Program (REAP) could help. If you’ve wanted to take some or all of your power use off-grid with solar, fix inefficiencies that increase your heating and cooling, or make other sustainability improvements, you could offset much of the cost through this USDA funding resource.
REAP provides financial resources to help rural small businesses and agricultural producers adopt more renewables and improve energy efficiency. In this article, we’ll discuss the basics of the program and share some insights from organic farmer and experienced REAP grant writing professional, Karl Sutton.
REAP and Funding Opportunities for Small Rural Businesses
Per USDA Rural Development, REAP aims to help “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.”
The program provides grants and loan guarantees for renewable power systems and energy efficiency improvements. It’s dedicated to assisting privately-owned, small businesses in rural areas and goods producers that gain the majority of income from agricultural operations.
REAP was first established under the 2008 Farm Bill. Today, it’s managed under guidance established in the 2022 Inflation Reduction Act, which allocated over $2 billion in funds for grants and loan guarantees. $1 billion has already been devoted to projects submitted between fiscal years 2023 and 2024. The remaining $1 billion is available through 2031.
REAP funding can be obtained as a grant, a loan guarantee, or a combination of both. Grants can be used to cover up to 50% of eligible project costs equal to a maximum of $1,000,000 for renewables projects and up to $500,000 for efficiency projects. The current match rate has increased from the previous rate of 25%, which was expanded through the Inflation Reduction Act and may or may not be extended into the future. Loan guarantees are offered for 60 to 85% of the loan amount. If combining a grant and a loan guarantee, REAP will provide a maximum benefit of 75%. If awarded a grant, applicants will need to declare the total amount as taxable income.
To apply for grants or loan guarantees to be awarded throughout the 2025 fiscal year, the current application deadlines are December 31, 2024 and March 31, 2025. Applications for the 2026 fiscal year must be submitted by September 30, 2025, December 31, 2025, or March 31, 2026. Applications for the 2027 fiscal year must be submitted by September 30, 2026, December 31, 2026, or March 31, 2027.
Because of these limited application pools and increasing competition for REAP funding, now is an excellent time to identify applicable projects, organize all application details, and prepare to submit as soon as possible.
Money saved by reducing inefficiencies and operating costs can be truly consequential as businesses of all types struggle to maintain profits under the rising cost of energy. By taking advantage of REAP funding, small businesses that have delayed sustainability investments and improvements to their operations, equipment, and property could turn back-burner plans into impactful change.
What Can You Do with a REAP Grant?
If you own an agriculture-based or rural small business and you’re ready to move forward with an energy efficiency or sustainability project, you could get a guaranteed loan or grant to offset the cost. Improvements to inefficient systems, equipment, and materials, as well as new capabilities like solar mounts, qualify under this program.
Buy and Install New Renewable Energy Systems
REAP funds can be applied to the purchase and installation of new renewable energy systems, including biomass, geothermal, hydrogen, hydropower below 30 megawatts, tidal/ocean generation, and small and large wind and solar systems.
Fix Inefficiencies and Update Old Systems
For existing systems that have a verifiable need for updates and upgrades, REAP funds can be applied to inefficient HVAC systems; insulation; lighting; cooling and refrigeration; doors and windows; electric, solar, or gravity pumps for sprinkler pivots; switching from diesel to electric irrigation motors; and replacing equipment with more efficient and renewably powered alternatives.
Realize Sustainable Agriculture Systems
Guaranteed loan funds can be applied to energy-efficient agricultural production and processing equipment purchases.
Why REAP Matters for Rural America
REAP presents major advantages for rural and agricultural producers throughout the country. States like Montana are a prime example of where REAP could be most impactful. With a population that’s 46.6% rural, an exceptional number of Montana small businesses could qualify for funding.
Even small upgrades that curb energy waste or utilize some renewable power can provide far-reaching, fast-felt benefits. As more rural businesses close efficiency gaps and adopt renewables with the help of REAP, these projects further the viability, ubiquity, and acceptance of more sustainable technology, such as agrivoltaics or cattle-voltaics solar mounts, which could put energy independence within reach state-wide and even national levels.
How Do You Get REAP Funding?
Make Sure You and Your Business are Eligible
If you are a United States citizen or a permanent, legally admitted resident, and you own a small business within a designated rural area, you could be eligible for a REAP grant or guaranteed loan. Your business must be classified as a small business per designations set by the U. S. Small Business Administration and as rural per USDA’s eligibility map. You could also be eligible if your business agriculturally produces products that generate at least 50% of your income, regardless of your proximity to a rural area or the size of your operations. Nonprofits that qualify as farms, rural electric cooperatives, and businesses operating on US tribal lands are also eligible. If your business and your residence share a meter, you will need to prove that your business’ energy usage exceeds your residential usage.
Choose a Relevant Project
After meeting these basic requirements, you’ll want to ensure that your project will qualify for either a loan guarantee or grant. REAP grants and loans can be used to purchase and install renewable energy systems, including geothermal, wind, and solar generation capabilities. They can also be used to make efficiency improvements to HVAC systems, insulation, lighting, and more.
Get a Project Quote and Provide Proof of Funds
Depending on whether you’re seeking a grant or loan, you will need to show that you have some or all funds available to complete your project. If applying for a loan, you must show that you can provide at least 25% of the project cost upfront. If applying for a grant, you must show that you have all the funds available to start and finish your project. The grant will then serve as a partial reimbursement. You will work directly with vendors or service providers to plan the project and get a quote. If approved for funding, you pay the vendor directly.
Prioritize and Strategize for Multiple Projects
REAP uses a scoring process to determine which projects are most deserving of funding. Scoring can be significant depending on how competitive REAP funding is within your state. If you’re considering multiple REAP-eligible projects and plan to submit applications for each, you may want to be strategic in which you prioritize to increase your chances of being awarded. As just a few examples, higher scores are given to projects that have not been previously submitted for REAP funding, that are located in disadvantaged or impoverished communities and disaster areas, that are for women and veteran-owned businesses, or that aim to improve efficiency on a system with a verifiable generation-to-usage ratio between 50% and 100% over 12 months or longer.
Complete Necessary Audits and Reviews
Energy audits, business income assessments, and other verifications, which will vary based on the state and the cost of the project, are required for energy efficiency-based projects. All projects must pass a state-based environment review before funds are awarded and construction begins. Additional verifications, such as your property’s historical preservation status, may also be required. The project itself must have technical feasibility and use commercially available technology.
Don’t Start Your Project Too Early
Even after the application has been submitted, no work can begin until funding has been approved. If any part of the project is started in advance of fund approval, the application will be rejected. Payments to vendors also should not be completed ahead of approval. Although not disqualifying, payments submitted prior to approval will not be covered by REAP. Application review takes between four and six weeks from the date of submission. After that time, awarded funds are available in about four to six weeks, but project work can begin as soon as notice of approval has been received.
Prepare to Apply
Additional eligibility requirements may apply. One way to accelerate the process of identifying eligibility, applying, and doing everything to increase your chances of being awarded is to work with an expert like Western MT Grant Writer, Karl Sutton. He is one of many professionals who specializes in REAP grant applications. Working with an expert in your state or region will simplify much of the process.
REAP Application Insights and Help from an Expert
Karl Sutton has helped all types of agricultural and rural small businesses secure funds from REAP. Through his role with the Montana Department of Agriculture’s Food and Ag Development Center (FADC) Network, he connects businesses with resources that put sustainability and renewable energy funding within their reach.
Karl’s approach is multifaceted. He collaborates with clients and vendors to develop a plan and identify relevant steps, such as the extent of the environmental review and if historical preservation details need to be confirmed. He then completes and advances their REAP applications, which includes writing the grant and submitting all eligibility and funding details. His work, which is supported by a technical assistance grant (TAG), has been vital to helping more Montana business owners get funding that’s been previously underutilized due to the application process, which Karl describes as “a beast”.
His projects include a downtown Ronan business operating in a building that’s roughly 100 years old and designed as a historical property. Modern replacements for 20-year-old heat pumps and a top-of-pole solar mount, which helped preserve the property’s historical esthetic, were partly funded through a REAP energy efficiency grant and a renewable energy grant. Karl also connected a cabinet maker with a photovoltaic (PV) battery hybrid system to offset energy costs during peak demand hours. With just that offsetting alone, their system is positioned to provide a full return on investment in fewer than 10 years. Thanks to a REAP grant and tax incentives, full payback is expected in half that time. For a beef farm with freezer storage as part of its shop, Karl helped secure a grant for spray foam insulation and an additional grant for a PV system that powers the entirety of their business operation. Just these few examples show how many options there are for small business owners who want to make real and lasting efficiency improvements.
If you’re interested in a REAP grant but aren’t sure where to start, Karl recommends first focusing on outdated systems that increase your energy use and applying for funding to address them. He’s helped businesses gain REAP funding to update insulation, convert diesel pumps to PV systems, and replace old meters. Additional grants can be submitted to adopt more advanced additions, like solar mounts for agrivoltaics projects and PV-powered manufacturing equipment.
Above all, he encourages potential applicants not to delay. Energy costs are not getting cheaper and virtually every small business can identify potential sustainability improvements. Especially in Montana, REAP is available for your benefit. Now is the time to take advantage.
REAP and Technical Assistance Grants
Technical assistance grants (TAG) help close gaps between potential REAP applicants and the resources they need to apply.
TAG-funded entities assist applicants by preparing and completing applications, assessing projects for eligibility, preparing technical reports, conducting environmental reviews and energy audits, planning construction and development, and completing other services. These entities include local governments and councils, colleges and institutions, nonprofits, and other organizations. TAG funds are made available to them to offset the cost of salaries, travel, office supplies, and other expenses related to REAP-relevant functions.
USDA Rural Development maintains lists of TAG-funded organizations and projects approved for REAP grants and other rural awards. They’re helpful resources for examples of successful projects and award amounts. They also include TAG-funded organization contact details, which are especially useful when seeking professional help while pursuing REAP funding.
