What does REAP do?
REAP supports renewable energy systems, such as solar, wind and biomass, and energy efficiency improvements on agricultural and rural small business operations. Rural Development's REAP page describes both grants and guaranteed loans for these purposes.
When that page was checked for this guide, it stated that REAP grant applications were not being accepted at the time while guaranteed loans could still be submitted. Programs open and close, so confirm the current status.
Check the status of both grants and loans on the program page before you spend money on a design or an audit, since availability determines what your financing options are.
Who is eligible?
Rural Development's page lists rural agricultural producers and rural small businesses that are independently owned or wholly owned by a tribe. The applicant must be an existing business, not a start-up, and the project must be in a rural area. Applicants cannot have delinquent federal debt, overdue federal taxes or be barred from federal funds.
Definitions of rural and of agricultural producer are in the program notice. Ask your state energy coordinator if you are unsure.
- Existing agricultural producer or rural small business
- Project in a qualifying rural area
- No delinquent federal debt or overdue federal taxes
- Applicant is the highest-level owner
What projects qualify?
The page lists renewable energy sources such as biomass, geothermal, hydropower, hydrogen, wind and solar. Efficiency projects include items like HVAC, insulation, lighting, refrigeration, and irrigation pumps and motors.
Efficiency projects require an energy audit or assessment, according to the page.
Ask your energy coordinator to explain which project types are the most common in your state, so you can see how your idea compares.
- Solar or wind to offset farm electricity use
- Efficient grain dryers, refrigeration or ventilation
- Irrigation pump and motor upgrades
- Anaerobic digesters or other biomass systems
How is funding structured?
Rural Development's page says grants can cover up to 25% of total project costs and that total REAP funding cannot exceed 75% of total project costs. You must provide cost sharing. A guaranteed loan, made by a commercial lender and backed in part by USDA, can fill part of the gap.
These figures come from the agency page, and rules can change, so check the current notice.
Ask your Rural Development energy coordinator what percentage of recent projects in your state were funded, and what kinds were most competitive.
What should I do before applying?
Get an energy audit or at least a clear estimate of your current use. Obtain quotes from installers and compare payback assumptions. Talk to your electric utility about interconnection rules for generation. Review your finances with a lender.
Start planning early, since applications require technical reports, financial statements and sometimes environmental review.
If your project involves a building or land you lease, bring written permission from the owner. Lenders and agencies want to see that you can keep the system in place.
- Energy bills for at least a year
- Installer quotes in writing
- Energy audit for efficiency projects
- Lender conversation
- Utility interconnection rules
What mistakes should I avoid?
Buying equipment before you understand the program rules is the most expensive one. Others include counting on savings estimates from a sales pitch, skipping the audit, and missing a deadline or portal requirement.
Be careful with companies that promise free systems paid entirely by USDA. Check any claim with your Rural Development energy coordinator. Keep every quote, bill and email in one folder. Applications ask for technical and financial details that are far easier to pull together if you have been organized from the start.
How does an energy project fit into farm finances?
Energy projects have large up-front costs and savings that arrive slowly over years. Before applying, build a simple model: total cost, any grant or loan, expected change in electric or fuel bills, maintenance, and when the project pays back. Use conservative numbers, since utility rates, weather and system performance all vary.
Also check how your utility handles a system that sends power back to the grid, and what permits your county requires. Talk with your lender and CPA about financing and tax questions before you sign an installer's contract, and keep copies of every quote and agreement.
Key takeaways
- REAP helps rural producers and small businesses with renewable energy and efficiency projects.
- Rural Development's page lists grants up to 25% of project costs and total REAP funding up to 75%; confirm current terms.
- Program windows open and close; check status first.
- Get an audit, quotes and lender input before you apply.
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.