On Monday, May 5, 2014, the United States Department of Agriculture (USDA) announced the availability of grants and guaranteed loans for eligible farms and other rural businesses under the Rural Energy for America Program (REAP) for fiscal year 2014.  Applicants can also apply for a combination grant and guaranteed loan.

Under this Notice of Funding Availability (NOFA), USDA is providing program levels of $12.4 million for grants and $57.8 million for guaranteed loans.  To support these program levels, USDA will use $28.2 million, of which $24.7 million is unused mandatory farm bill funding from the 2008 Farm Bill, carried over from fiscal year 2013.  The remaining $3.5 million was appropriated in the FY 2014 omnibus appropriations bill.

When USDA publishes the final rule for REAP, it will also publish a second NOFA to announce the availability of additional mandatory funding for the remainder of FY 2014.  This funding will come from the 2014 Farm Bill, which provides $50 million per year.  REAP is currently operating under an interim rule, and the final rule is expected to be published before the end of the fiscal year.

Eligibility Requirement

Farms and small rural businesses are eligible to apply for funding under REAP.  Non-farm, small business applicants must demonstrate that they derived at least fifty-one percent of their annual sales over the last 3 years from a rural area.

Applicants may also submit a single application that proposes to apply the same renewable energy system or energy efficiency improvement across multiple facilities.  For example, if a rural small business owner owns five retail stores and wishes to install solar panels on each, a single application can be submitted for installation the solar panels on all five stores.

Additionally, applications that were submitted for the 2013 fiscal year and were determined to be eligible, but were not funded, can be resubmitted for consideration.

We are pleased to report that, consistent with NSAC’s policy position on the use of REAP funds, the NOFA explicitly prohibits the use of REAP funds for ethanol blender pumps.  NSAC championed a successful effort during the 2014 Farm Bill debate to eliminate USDA’s authority to provide assistance for flexible fuel pumps at gas stations.  As a result, proposals that seek to fund such projects “will not be determined eligible or awarded funds in Fiscal Year 2014 under REAP,” according to the NOFA.

Application Deadlines

Applications must be submitted to USDA Rural Development State Offices no later than 4:30 p.m. local time of the dates as follows:

• July 7, 2014 for renewable energy system and energy efficiency improvement grant applications and combination grant and guaranteed loan applications
• On a continuous basis until July 31, 2014 for renewable energy system and energy efficiency improvement guaranteed loan only applications

Maximum Awards

The maximum amount of grant assistance to an entity will not exceed $750,000 for Fiscal Year 2014.

• For renewable energy and energy efficiency system grants, the minimum grant is $2,500 and the maximum is $500,000.  For energy efficiency improvement grants, the minimum grant is $1,500 and the maximum grant is $250,000.
• For renewable energy system and energy efficiency improvement loan guarantees, the minimum guaranteed loan amount is $5,000 and the maximum amount of a guaranteed loan to be provided to a borrower is $25 million.
• For grant and guaranteed loan combination packages for renewable energy systems and energy efficiency improvement projects, the maximum amount for the grant portion is $500,000 for renewable energy systems and $250,000 for energy efficiency improvements.  The minimum amount of the grant portion is $1,500 for either renewable energy systems or energy efficiency improvements.  For the guarantee portion, the maximum amount is $25 million and the minimum amount is $5,000.

Selection Process

Inter-state, intra-state and national competitions will be held to determine funding allocations.

• Inter-state competition: Renewable energy system and energy efficiency improvement applications for FY 2014 funds will compete for funds allocated to their State for competition.  Separate competitions will be held for (1) grant only and grant and guaranteed loan combination applications; and (2) guaranteed loan only applications.  Grant only and grant and guaranteed loan combination applications will have one State competition.

• Intra-state competition: All unfunded eligible grant only and grant and guaranteed loan combination applications received by July 7, 2014, will compete against other grant only and grant and guaranteed loan combination applications from other States at a final national competition.

• National competition: National competitions will be held monthly for guaranteed loan only applications.  Finally, all unfunded eligible guaranteed loan only applications received by July 31, 2014, will compete against other guaranteed loan only applications from other States at a final national competition if the guaranteed loan reserves have not been completely depleted.  If funds remain after the final guaranteed loan only national competition, the Agency may elect to utilize budget authority to fund additional grant only and grant and guaranteed loan combination applications that competed in the national competition.

How to Apply

Applicants may obtain hard copy applications from any USDA Rural Development Energy Coordinator, or online.  Electronic applications can be submitted via grants.gov.  Note: Guaranteed loan only applications and Guaranteed loan/grant combination applications must be submitted as hard copies.