Programs help expand rural business
By TYLER ELLYSON — CNA staff reporter tellyson@crestonnews.com
Local business owners and entrepreneurs gathered at Southwestern Community College Monday for the Southwestern Business Conference and Expo.
The event included many breakout sessions that exposed the owners and entrepreneurs to service and resource providers.
Kate Sand, USDA Rural Development area specialist, was on hand to give a session on what the USDA offers.
Sand explained two major programs to a crowd of about 20.
These were the Rural Energy for America Program (REAP) and Value Added Producer Grant (VAPG).
REAP
REAP offers grants and guaranteed loans for renewable energy and energy efficiency improvements among small businesses and agriculture producers.
This includes things like lighting, heating and cooling systems, insulation and equipment efficiency.
According to Sand, irrigation and grain dryers are popular projects for this type of funding.
"We also do a lot of wind projects," she added.
Major projects including geothermal, solar and hydrogen and feasibility studies are also covered under REAP.
Eligibility
To be eligible for the funds, a business or producer has to be located in a community with a population of fewer than 50,000 people.
Rural Development offers qualified applicants grants that cover 25 percent of costs and guaranteed loans that could cover an additional 50 percent of the costs.
Grants through the program range from $1,500 to $500,000. A guaranteed loan can be from $5,000 to $25 million, but there is a 2 percent fee upfront and a .25 percent annual renewal fee on the unpaid balance.
Rural Development guarantees repayment to a lender on up to 80 percent of the loan.
"Essentially, the USDA is co-signing for you," said Sand.
REAP has been Rural Development's most popular program since it was established in the 2002 Farm Bill, Sand said.
Last year, 152 of the 155 applicants were funded, and this year there are already more than 300 applications. A point system using 11 specific criteria will be used to choose those projects that will receive part of the $60 million funded this year.
"It's a competitive program," said Sand.
Funding is set aside for grants of $20,000 or less.
The deadline for REAP applications is July 31.
VAPG
These grants are available for individuals and businesses for planning and increasing marketing opportunities for value-added products.
Independent producers, farmer cooperatives, producer groups and majority-controlled producer-based business ventures located in a community with fewer than 50,000 people are eligible.
The grants are allocated through two different categories, planning and working capital.
Working capital grants can be for as much as $300,000 while planning grants can not exceed $100,000. Either grant has to be matched by the recipient.
"There are very specific guidelines for this as far as who's eligible," said Sand.
Eligible products
To be eligible, a product has to be achieved in state or locally grown, if it's sold in state within a 200-mile radius of where it's grown.
Products like wine, cheese, meats and flowers would qualify for VAPG. Renewable energy for farming is also eligible.
Each product has to have specific ownership and fit into one of the five categories — change in state, locally grown, produced in a manner where value is added to the commodity, physically segregated or farm-based renewable energy.
A project cannot be underway before a grant is received unless it involves energy.
Sand said there is no deadline for receiving VAPG applications yet, but she expects it be around September or October. She does encourage people to submit a preliminary application and seek assistance from Rural Development.
"The review is a little pickier on this program than others," said Sand. "If you don't check a box correctly, they can throw out your application."
For more information, contact Sand at 515-961-5365 ext. 130 or kate.sand@ia.usda.gov.
