Fact Sheet – Tennessee

I. Overview

“REAP” offers grants, guaranteed loans, and combination grant/guaranteed loans to help agricultural producers and rural small businesses purchase and install renewable energy systems and make energy efficiency improvements in rural areas.

II. Who is eligible

Agricultural Producer (individual or entity) directly engaged in the production
of agricultural products and obtains at least 50% or greater of their gross
income from their agriculture business.

Small Business (individual or an entity is considered a small business in
accordance with SBA’s (Small Business Administration) small business size standards (by NAICS codes). SBA small size standards can be found at

III. What areas are eligible

The following link can be utilized to access the eligibility of your project’s location:

IV. Other Eligibility Criteria

All costs must be located in a rural area (pop. 50,000 and less)

Costs must be for a pre-commercial or replicable and feasible technology

Applicant must be owner of the project and control operations and maintenance

Applicant must demonstrate that revenues sufficiently cover O&M

Applicant must be US citizen or hold permanent residency

Entities must be 51% or more US owned

Applicant will have no outstanding federal judgments or any delinquency in federal debts

V. Thresholds for Assistance

VI. Start the Application Early

Two (2) copies of your application are to be submitted to the USDA Rural Development Area Office where your project is located or, in the case of a rural small business, where they are headquartered.

Selection is based on a nation-wide competition for funds. To qualify for consideration for funding, an application must meet the application requirements, technical requirements, and environmental requirements.

Separate applications must be submitted for renewable energy system and energy efficiency improvement projects. Only one application per each type of project may be submitted per year.

VII. Types of Projects

Renewable Energy– Biomass, Anaerobic Digesters, Geothermal (electric generation and direct use), Hydrogen, Wind, Solar.

Energy Efficiency Improvements– any energy efficient improvements verified by an energy audit or assessment.

VIII. Eligible Costs

1. Post Application purchase and installation of equipment
(except agricultural tillage equipment and vehicles)

2. Post Application construction or project improvements
(except residential)

3. Energy Audits & Energy Assessments

4. Permit and License Fees

5. Professional Service Fees
(except application preparation)

6. Feasibility Studies and Technical Reports

7. Business Plans

8. Retrofitting

9. Construction of new energy efficient facility
(only when it is used for same purpose, is the same size and will provide more energy savings)

10. Working Capital (REAP Guaranteed Loan Only)

11. Land Acquisition (REAP Guaranteed Loan Only)

IX. Getting Started and Website Information

The application can be found online at our website at:


Fact Sheet – Tennessee

This program is designed to help agricultural producers and rural small businesses reduce energy costs and consumption, and help meet the Nation’s critical energy needs. The program is administered by the Rural Business and Cooperative Program Division of the USDA Rural Development.

Need for Program
The primary purpose of the Renewable Energy and Energy Efficiency Program is to create an opportunity for rural economic development and growth. These opportunities include increasing local revenue, bolstering the local job market, and increasing the economic yield of land. This is achieved by expanding the existing private credit structure capability to make and service quality loans to provide lasting community benefits.

Benefits to Businesses
Higher loan amounts, stronger loan application, less equity injection, lower interest rates and longer repayment terms assist businesses that may not qualify for conventional lender financing

Assist businesses in stability, growth, expansion and rural employment

Benefits to Lenders
Provide lenders with another tool to expand their loan portfolio

Improve the economic and environmental living climate in rural communities

Guarantee portion can be sold to enhance liquidity and increase profitability while limiting financial exposure

Allows lender to make loans above its loan limits

Eligible Areas
Renewable Energy and Energy Efficiency loans can be guaranteed in cities or towns up to 50,000 population.

Eligible Borrowers
To be eligible, applicants must be an agricultural producer or rural small business. An agricultural producer is defined as an individual or legal entity which receives at least 50% of its gross income from agriculture production. An entity is considered a small business in accordance with the Small Business Administration’s (SBA) small business size standards by NAICS code.


Eligible Lenders
Most lenders are eligible, including national and state-charted banks, Farm Credit System banks and savings and loan associations. Other lenders may be eligible if approved by USDA.

Eligible Project Costs

-Post-application purchase and installation of equipment (new, refurbished or remanufactured)

-Post-application construction or improvements

-Energy audits or assessments

-Permit or license fees

-Professional service fees

-Feasibility studies and technical reports

-Business plans


-Construction of a new energy efficient facility only when the facility is used for the same purpose, is approximately the same size, and based on the energy audit will provide more energy savings than improving an existing facility.

-Working capital

-Land acquisition

Ineligible Project Costs

-Agricultural tillage equipment, used equipment and vehicles

-Residential construction or improvements

-Fees associated with application preparation


-Lines of Credit

Minimum and Maximum Loan Amount
Renewable Energy for America Program loans [or REAP loan and grant combined] will not exceed 75 percent of total eligible project costs. The minimum amount of a guaranteed loan made to a borrower will be $5,000. The maximum amount of a guaranteed loan made to a borrower is $25 million. Loans over $10 million require National Office concurrence.
Loan Guarantee Limits
Maximum percentage applies to the entire loan.

-85% for loans of $600,000 or less

-80% for loans greater than $600,000 up to $5 million

-70% for loans greater than $5 million up to $10 million

-60% for loans greater than $10 million up to $25 million

*USDA Rural Development determines the percentage of guarantee based on:

-Borrower management


-Financial condition

-Lender’s exposure

-Trends and conditions

Loan-to-Appraised Market Value Ratios
The maximum loan-to-appraised market value ratios are typically:

-80% Real estate

-60% Accounts receivable

-60% Inventory

-70% Machinery/Equipment

Specialized collateral warrants additional discounts and less advance rates.

Interest Rate
Interest rates for loans may be fixed or variable. The rate is negotiated between the lender and the borrower and will not be more than those rates customarily charged to other borrowers in similar circumstances. The variable rate must be tied to a nationally published rate. Variable rates cannot be adjusted more than quarterly.

Borrower Equity Requirements
For loans of $600,000 or less, borrower shall demonstrate evidence of cash equity injection in the project of not less than 15 percent of eligible project costs. For loans over $600,000, borrowers shall demonstrate evidence of cash equity injection in the project of not less than 25 percent of eligible project costs. The fair market value of equity in real property that is to be pledged as collateral for the loan may be substituted in whole or in part to meet the cash equity requirement.

Maximum Repayment Terms:

-Working Capital 7 years

-Machinery and Equipment 20 years or useful life

-Real Estate 30 years

-Combined real estate and machinery & equipment must not exceed 30 years

Fees and Costs
There is a one-time guarantee fee not to exceed one (1) percent of the guaranteed principal amount and an annual renewal fee. The rate of the annual renewal fee is established in an annual notice published in the Federal Register. Fees are paid by the lender. The one-time guarantee fee may be passed on to the borrower. The annual renewal fee may not be passed on to the borrower. Other typical lender costs may also be incurred.

Feasibility Studies and Technical Reports
For Renewable Energy projects a business-level feasibility study will be required. The study will be completed by an independent qualified consultant and will include an evaluation of economic, market, technical, financial and management feasibility. Renewable Energy projects and Energy Efficiency projects will be required to submit a technical report. The technical report must demonstrate that the project design, procurement, installation, startup, operation, and maintenance of the renewable energy system or energy efficiency improvement will operate or perform as specified over its design life in a reliable and a cost-effective manner.

An appraisal report prepared by an independent, qualified fee appraiser will be required on property that will serve as collateral. Appraisals will be made in accordance with the accepted format and standards of the industry. Specialized appraisers will be required.

All collateral must secure the entire loan. The discounted collateral value will normally be at least equal to the loan amount. Unconditional personal and corporate guarantees for those owners with an interest greater than 20 percent are required.

USDA Evaluation of Applications

-Borrower eligibility

-Project eligibility

-Project has technical merit

-Reasonable assurance of repayment ability

-Sufficient collateral and equity

-Compliance with all applicable statutes and regulations

USDA Rural Development strongly encourages the lender to submit a pre-application in order for the Agency to make a preliminary eligibility determination before the lender submits a full application. A pre-application guide may be requested from any USDA Rural Development Office:

Please contact the office serving your County at the end of this document.

Standard lender documents will be utilized. USDA Rural Development will have additional forms relating to the loan guarantee and other items to comply with Agency requirements.

Once the project has been constructed, the lender must provide the Agency periodic reports from the borrower for up to a maximum of 3 years.

Annual financial statements are required. Lender services and liquidates with USDA concurrence.

For More Information
Contact a USDA Rural Development Area Office shown below.

USDA Rural Development has 8 Area Offices throughout Tennessee that cover their respective counties. Please contact the Area Specialist covering your area to inquire into your project and to begin the application process:

Bob Small, Area Specialist
Phone: (423)638-4771 ext. 4 Fax:(423)639-0956
Counties in the Greenville Area are: Carter, Greene, Hancock, Hawkins, Johnson, Sullivan, Unicoi, and Washington.

Chuck Morris, Area Specialist
Phone: (865) 523-3338 ext. 126 Fax: (865)525-7622
Counties in the Knoxville Area are: Anderson, Blount, Campbell, Claiborne, Cocke, Grainger, Hamble, Jefferson, Knox, Loudon, Monroe, Morgan, Roane, Scott, Sevier, and Union

Alisa Farmer, Area Specialist
Phone: (423) 756-2239 ext.2 Fax: (423)756-9278
Counties in the Chattanooga Area are: Bledsoe, Bradley, Grundy, Hamilton, McMinn, Marion, Meigs, Polk, Rhea, and Sequatchie.

Jimmy Allen , Area Specialist
Phone: (931) 528-6539 Ext. 2 Fax: (931)528-1976
Counties in the Cookeville Area are: Cannon, Clay, Cumberland, DeKalb, Fentress, Jackson, Macon, Overton, Pickett, Putnam, Smith, Van Buren, Warren, White.

Pam Crozier, Area Specialist
Phone: (615) 783-1359 Fax: (615) 783-1340
Counties in the Nashville Area are: Cheatham, Davidson, Dickson, Houston, Humphries, Montgomery, Robertson, Rutherford, Stewart, Sumner, Trousdale, Williamson, and Wilson.

Susan Shuff, Area Specialist
Phone: (931)762-6913 ext.4 Fax: (931)762-4193
Counties in the Lawrenceburg Area are: Bedford, Coffee, Franklin, Giles, Hickman, Lawrence, Lewis, Lincoln, Marshall, Maury, Moore, Perry and Wayne.

Joel Howard, Area Specialist
Phone: (731) 668-2091 ext. 102 Fax: (731) 668-6911 or 7195
Counties in the Jackson Area are: Chester, Decatur, Hardeman, Hardin, Haywood, Henderson, McNairy, Madison, Fayette, Lauderdale, Shelby, Tipton.

Van Wylie, Area Specialist
Phone: (731) 885-6480 ext. 4 Fax: (731)885-5487
Counties in the Union City Area are: Benton, Carroll, Crockett, Dyer, Gibson, Henry, Lake, Obion, and Weakley.