Last reviewed November 2026
The Rural Energy for America Program helps agricultural producers and rural small businesses finance renewable energy systems and energy efficiency improvements. Its loan guarantees follow the same OneRD rule as B&I, with a few energy-specific conditions.
What REAP finances
REAP guaranteed loans can finance the purchase and installation of renewable energy systems, such as solar, wind, small hydropower, geothermal and biomass, and energy efficiency improvements such as HVAC, lighting, insulation, refrigeration and irrigation pump upgrades. Agricultural producers may also finance energy efficient equipment for production and processing. Small business borrowers must be in an eligible rural area; agricultural producers may be in non-rural areas when the project is tied to on-site production.
As of November 15, 2026, USDA's REAP page says grant applications are not being accepted but guaranteed loan applications may be submitted, and it notes a pause on biodigester and controlled environment agriculture applications. Check the page before committing to a project type.
Key terms
- Loan guarantees cover loans up to 75% of eligible project costs. The borrower must show a contribution of at least 25% of total eligible project costs.
- Combined REAP guaranteed loans to one borrower may not exceed $25 million.
- For FY 2026 the REAP guarantee was 80%, with a 1% one-time guarantee fee and a 0.25% annual retention fee. Rates are reset each fiscal year.
- The lender sets the term, with USDA concurrence, based on the useful life of the assets and repayment ability. USDA's program page lists a 40-year maximum.
- Rates may be fixed or variable, and variable rates may not adjust more often than quarterly.
Energy-specific closing conditions
On top of the general OneRD certifications, for renewable energy and energy efficiency projects the lender must certify that the project has been performing, or will perform, at a steady operating level under the technical requirements, plans and specifications. The standard is 30 days of steady-state operation unless USDA modifies it in the conditional commitment. For renewable energy systems, the lender also delivers the executed power purchase agreement or the utility's permission to operate letter where one applies.
- Read the technical report or vendor certification early; it drives the performance certification.
- Coordinate equipment warranties, installation contracts and interconnection agreements, and take assignments where the collateral plan calls for them.
- Confirm the borrower's 25% contribution is in, and show it on the settlement statement.
- If a REAP grant is also part of the project, coordinate the grant terms (7 CFR part 4280, subpart B) with the loan documents.
How KS can help
Kennedy Sutherland LLP has closed REAP guaranteed loans for lenders. The firm prepares lender-side loan documents for USDA guaranteed loans, reviews conditional commitments, and helps lenders assemble the certifications USDA needs to issue the loan note guarantee. Fixed-fee quotes are available for SBA and USDA loan closings. Initial consultations for lenders are free. Call 210.259.3885.
This guide is general information for lenders and borrowers, not legal advice. Reading it does not create an attorney-client relationship. SBA, USDA and FSA rules change often, so confirm the current program requirements and the terms of your loan's authorization or commitment before relying on it. Kennedy Sutherland LLP is a private law firm. It is not affiliated with or endorsed by SBA, USDA or FSA.
Sources
- USDA Rural Development, REAP guaranteed loans
- 7 CFR part 5001, OneRD Guaranteed Loans (eCFR)
- 7 CFR 5001.452, loan closing and conditions to issuing the loan note guarantee
- 7 CFR 5001.406, guaranteed loan amounts
- USDA OneRD annual notice of fees and guarantee percentages for FY 2026, 91 FR 11272 (Mar. 9, 2026)
- 7 CFR part 4280, subpart B, REAP grants (eCFR)
Sources checked November 2026.