What is a REAP grant?
According to Rural Development, REAP grants are competitively awarded to reimburse part of the cost of installed renewable energy or energy efficiency projects. The agency page says grants can cover up to 25% of total project costs, and applicants must provide cost sharing.
The page also states minimum and maximum grant amounts that differ for renewable energy and efficiency projects. Check the current notice for exact figures.
Because grants reimburse installed costs, you generally pay first. Make sure your financing covers the whole project until reimbursement arrives, and ask Rural Development about the rules for starting work.
What is a guaranteed loan?
A REAP guaranteed loan is made by a commercial lender, with USDA guaranteeing a portion. The guarantee lowers the lender's risk and can make financing available that might not otherwise be. You still repay the lender, and the lender still decides whether to lend.
The agency page says guaranteed loans are available for the same purposes as grants.
Not every lender participates in USDA guarantee programs. Ask your lender early whether they have used one and how the process works. The guarantee protects the lender, not you, so your repayment obligation and any collateral requirements still apply.
Can I combine them?
Rural Development's page says an applicant can apply for a loan alongside a grant, but total REAP funding cannot exceed 75% of total project costs. You would cover the rest with your own funds.
Because grants are competitive and may not be open, plan so that the project still works if you receive only a loan or neither.
If you plan to rely on a loan guarantee, confirm before you begin design work that your lender is willing to consider the project.
- Grant: partial reimbursement, competitive
- Guaranteed loan: lender-made loan with USDA backing
- Combined: capped as a share of total project cost
- Your own funds: always part of the plan
How do lenders look at an energy project?
A lender will look at your overall repayment ability, not only the savings from the project. They will review financial statements, cash flow, collateral and the quality of the equipment and installer. Rural Development's page also mentions a stability requirement based on the ratio of current assets to current liabilities.
Bring energy bills, a quote, an audit and a simple projection of savings with conservative assumptions.
- Financial statements and cash flow
- Energy bills and an audit
- Installer quote and equipment details
- Conservative savings projection
What about project limits and rules?
The page notes that ground-mounted solar and wind projects cannot be installed on cropland and that each applicant can receive one award per federal fiscal year. Rules like these can change, so read the current notice before designing a project.
Efficiency projects need an energy audit or assessment, according to the page.
Keep an eye on environmental review. Depending on the project, there may be requirements related to land, wildlife or historic sites that take extra time. Ask Rural Development how it treats equipment already bought or installed, since rules about timing and prior work can affect eligibility.
What should I ask?
Ask your Rural Development energy coordinator which funds are open, what documentation is needed, how long review takes and what costs count. Ask your lender if they have experience with REAP guarantees. Ask your utility about net metering and interconnection.
Ask an installer for references from other farms, and a CPA how any grant and depreciation will be treated.
- Which REAP funds are open now?
- What documents are required?
- How long does review take?
- Does my lender know USDA guarantees?
How do I compare installer quotes?
Ask at least two or three installers for written quotes that list equipment, capacity, warranties, installation and any permitting work. Ask for the assumptions behind savings estimates, including electric rates, hours of use and weather. Compare the numbers with your own bills.
Ask for references from farms or rural businesses with similar systems, and call them. Find out how the system has performed and how the installer handled problems. Be careful with high-pressure sales and with claims that a system is free. Read contracts closely, and have an attorney review any long-term agreement.
Key takeaways
- REAP grants reimburse part of a project; guaranteed loans help a commercial lender finance it.
- Rural Development's page says total REAP funding cannot exceed 75% of project costs; confirm current rules.
- Design the project so it still works without a grant.
- Bring an audit, quotes and conservative savings estimates to your lender.
Sources and official links
Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.