USDA Rural Energy for America Program Loans
Implement renewable energy systems and upgrade or install energy-efficient equipment with a USDA Rural Energy for America Program loan (USDA REAP loan). 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. This specialty rural development loan is part of the USDA OneRD Guarantee Loan Initiative.
What is a USDA REAP Loan?
The USDA Rural Energy for America Program provides financing in the form of grants and guaranteed loans for purchasing and installing renewable energy systems and making energy efficiency improvements.
Eligible applicants:
- Agricultural producers – those directly engaged in agricultural production (at least 50% of historical gross income) in rural and non-rural areas
- Rural small businesses – a business or utility located in an eligible area with 50,000 or fewer residents
USDA REAP Loan Requirements, Amounts, Rates, and Terms
- Applicants must provide at least 25% 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
Higher Loan Amounts
- Finance up to 75% of eligible project costs
- $25,000,000 maximum loan amount
- $5,000 minimum loan amount
Competitive Interest Rates
- Negotiated between lender and borrower
- Cannot exceed USDA maximum
- May be fixed or variable
- Additional fees are applicable
Flexible Repayment Terms
- Real estate – 30 years
- Equipment – 15 years or useful life, whichever is less
- Real estate + equipment – 30 years
- Working capital – 7 years
How Can Your Business Use a USDA REAP Loan?
Farmers, ranchers and small business owners can use USDA REAP loans in a variety of ways to lower energy costs and reduce reliance on fossil fuels.
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
- Hydrogen
- 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)
- Insulation
- Lighting
- 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.
Build Energy-Efficient Facilities
Secure a USDA REAP loan for systems that will enable your business to run on renewable energy powered by the sun, wind, waves, biomass, hydrogen, or geothermal sources.
Upgrade to Energy-Efficient Equipment/Systems
Retrofit your current facilities and operations with energy-efficient heating, cooling and ventilation systems, as well as lighting, fans, insulation, and automated controls.
Produce On-Farm/Ranch Renewable Energy
Produce energy on your own land by installing solar panels, smart electricity meters, wind turbines, small hydroelectric systems, and more.