Exploring Agriculture Grants, Loan Guarantees & Tax Credits

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Renewable Energy Doesn’t Have to be Out-of-Reach

By Alexis Crispin

Energy-efficient technologies can offer significant savings.  However, the initial costs of integration may leave farmers reluctant to take the financial leap. That doesn’t have to be the case when there are options to help you put these technologies into place now cost-effectively.

There are a few programs that can help alleviate some of the financial burden that the up-front costs of these projects require including:

  • Grants. They do not have to be repaid at any point in time and are often referred to as “free money.”
  • Loan guarantees. The participating agency guarantees loans issued and allows individuals to acquire financing at low-interest rates, possibly even with no down payment.
  • Tax credits. These directly offset your tax liability and reduce your taxes dollar for dollar.

Loan Guarantee & Grant Options

The USDA – Rural Energy for America Program (REAP) Grants and Loan Guarantees is especially useful for farmers who would like to begin incorporating energy-efficient systems into their operations, or for those who would like to improve upon existing systems. Funds can be used by agricultural producers and rural small businesses to purchase, install, and construct renewable energy systems, or to make energy-efficient improvements to non-residential buildings and facilities. These include wind, solar, biomass, and geothermal projects.

USDA REAP grants can cover up to 25% of the project costs, and loan guarantees can be used to cover up to 75% of the project costs. (The minimum combined grant and loan guarantee amount must be at least $5,000.) The deadline to apply for FY 2020 funds is March 31, 2020.

In addition to available REAP grants, the USDE – Loan Guarantee Program can be used to issue loan guarantees for projects with high technology risks that improve air quality or reduce emissions of greenhouse gases. It’s intended to encourage the use of new or improved technologies in energy projects.

Tax Credits Available

With the Residential Renewable Energy Tax Credit, individuals may claim a tax credit for qualifying solar-electric systems, solar water heaters, small wind-energy systems, fuel cell systems (maximum credit is $500 per half kilowatt), or geothermal heat pump systems placed in service by December 31, 2021. Credits are 26% of qualified expenditures for systems placed in service by January 2, 2020, or 22% of qualified expenditures for systems placed in service after December 31, 2020, and before January 1, 2022. The maximum credit for fuel cells is $500 per half kilowatt and there is no limit on the credit for the other technologies.

The Business Energy Investment Tax Credit is a corporate tax credit for qualified expenditures on various renewable energy technologies including solar technologies, fuel cells, small wind turbines, geothermal systems, and microturbines.

Explore Your Options

Numerous programs are available for the agriculture industry.  This article doesn’t include every program opportunity that’s available, and there are other options that may make sense for your agribusiness. We welcome a discussion of your needs and current projects.  Contact a member of our agriculture team today to learn more.