What is USDA Rural Development?
Rural Development, often shortened to RD, is the USDA mission area that supports rural economic growth through housing, utilities and business programs. Its business programs page lists loans, loan guarantees and grants that vary by purpose.
RD is different from FSA. FSA focuses on farm production credit and farm programs, while RD focuses more on rural business development, infrastructure and community facilities.
Think about how a federal program fits with local sources of help. State economic development agencies, extension small business centers and community lenders sometimes offer help that complements federal programs.
What business programs might apply to a farm?
RD's Rural Business Development Grants are described on its site as support for small rural businesses and related technical assistance, with funds usually going to organizations rather than directly to a single farm. Value-Added Producer Grants help producers move into processing or marketing of agricultural products, and there are priorities for beginning and veteran producers in some years.
Other RD programs offer business loan guarantees through lenders. Check the RD site for each program's current purpose, funding and notices.
Keep your records separate for the farm and any new business. A clean separation makes it easier to show a reviewer what the project is, and it helps with taxes and liability, which you should discuss with a CPA and an attorney.
Who is eligible?
Eligibility depends on the program. Common factors include the location of the business in a qualifying rural area, the type of applicant, the business plan and the use of funds. Some programs fund nonprofits, cooperatives or public bodies, and not individuals.
Read the notice of funding or program page and ask your state RD office whether your project fits before you spend time on an application.
How should I prepare an application?
Start with a clear project description: what you will do, who your customers are, what it costs, and where other money comes from. Programs often want a business plan, financial projections, evidence of market demand and sometimes a feasibility study.
Write the narrative so a reviewer who has never visited your farm can follow it. Keep copies of everything submitted.
- Business plan and financial projections
- Budget with sources of matching funds
- Letters of support or customer commitments
- Registration information for the entity
- Records of ownership and permits
What should I ask the RD office?
Ask whether the program is open, when the deadline is, whether the funds are grant or loan, and how reimbursement works. Ask how scoring happens and what a strong application includes. Grants can be competitive and slow, and funds are often paid after you spend.
Plan your cash flow accordingly and talk to your lender early if you need bridge financing.
Because many Rural Development funds are paid after you spend, work out where the first dollars come from. Some applicants line up a bridge loan or use their own cash, and a lender can tell you what is realistic given your balance sheet and the grant terms.
How do I avoid grant scams?
Real USDA programs do not charge application fees and do not call you out of the blue to say you have won a grant. Be wary of anyone who asks for a payment to release funds or who uses personal email addresses or messaging apps to collect information.
Verify with the RD state office using contact information listed on rd.usda.gov, and apply only through official channels.
Registration steps for federal funding can take weeks, so start them early. Staff at the state RD office can tell you what registrations a particular application requires.
What are examples of farm-related projects?
Rural Development programs have supported projects such as small processing facilities, packing and storage space, farm stores, and business expansions that add jobs in rural areas. Whether a particular project fits depends on the program and the applicant type.
For a farm family, the question is often whether a new venture is separate from the farm operation, such as a processing business or retail outlet, and whether a loan guarantee, a grant through an organization, or a conventional loan makes more sense.
Talk to your state RD office about the project in early form. Staff can tell you whether a program is open, and your lender and an accountant can help you test the numbers before you apply.
Key takeaways
- RD funds rural business, infrastructure and community projects.
- Many grants go to organizations, so check who the applicant can be.
- Prepare a solid business plan and budget before applying.
- Expect reimbursement timing and plan your cash flow.
- Never pay a fee to receive a USDA grant.
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.