REAP in 2026: The Grants Stopped, the Loans Did Not

For the full regulatory framework, gate by gate, see The USDA Feasibility Study Framework.

On 31 March 2026 the USDA announced it would make no further Rural Energy for America Program grant awards until it rewrites the programme's regulations. Two weeks later it rescinded the funding notice that had been governing applications since October 2024. But the REAP guaranteed loan stream never closed, applications are still being accepted year-round, and the difference between those two facts is worth up to 75% of a project's eligible costs to a rural business that understands it.

This article sets out exactly what happened, what remains available today, what happens to applications already filed, what the rewritten regulation is likely to contain, and what a rural business or agricultural producer should do in the meantime.

The short version

The single most consequential misunderstanding circulating right now is that REAP has closed. It has not. One of its two funding streams is in a holding pattern while the other continues to operate, and a business that treats the programme as unavailable will lose a full funding cycle for no reason.

How REAP is actually structured

Most applicants encounter REAP as a single thing — "the REAP grant" — and that framing is the source of most of the current confusion. The programme has two distinct funding mechanisms, authorised differently, administered under different regulations, and unaffected by each other's status.

The grant stream

REAP grants pay a share of eligible project costs outright. Under the now-rescinded notice, the cost share depended on the funding source. Farm Bill base funds covered up to 25% of total eligible project costs. Inflation Reduction Act funds, made available under section 22002, covered up to 50% for qualifying projects.

Grant sizing was capped by project type. Renewable energy system grants ran from a $2,500 minimum to a $1,000,000 maximum. Energy efficiency improvement grants ran from $1,500 to $500,000. An applicant seeking a grant alone had to supply at least 75% of project cost from other sources.

Grants were competitive. Applications were scored against published criteria and awarded in funding cycles, which is why the timing of the rescission matters so much to applicants who had built a submission around a specific window.

The guaranteed loan stream

REAP guaranteed loans work entirely differently. The applicant borrows from a commercial lender, and USDA guarantees a portion of that loan to the lender — reducing the lender's exposure and, in practice, making credit available to borrowers and projects that would otherwise struggle to obtain it.

The guaranteed loan covers up to 75% of total eligible project costs. USDA's guarantee to the lender is set annually by Federal Register notice; for recent fiscal years it has been 80%. The maximum guaranteed loan is $25 million. Terms run up to 40 years, established by the lender with agency concurrence based on the useful economic life of the financed assets and the borrower's repayment ability. Interest rates are negotiated between lender and borrower and may be fixed or variable, with variable rates adjustable no more often than quarterly. There is an initial guarantee fee, currently 1% of the guaranteed amount.

Critically, guaranteed loan applications are accepted on a continuous cycle. There is no funding window to miss and no competitive scoring round to wait for.

Combined requests

Under the previous notice an applicant could request both, with combined grant and guaranteed loan funding not exceeding 75% of total eligible project costs. That combination route is not available while grants are paused. A project structured on the assumption of a combined award needs restructuring around the loan alone or around alternative equity.

What happened, in sequence

Understanding the pause requires understanding that it is the third step in a sequence that began nine months earlier.

7 July 2025 — Executive Order 14315

The President signed Executive Order 14315, titled Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources. The order directs federal agencies to curtail subsidies and preferential treatment for energy sources the administration characterises as unreliable or foreign-controlled, with wind and solar as the principal targets. It also directed Treasury and Interior to enforce the tax-credit phasedowns enacted in the One Big Beautiful Bill Act.

For USDA the order created an immediate problem. REAP is, by volume, substantially a solar programme. Roughly 70% of approximately $1 billion in recent REAP funding cycles supported solar projects. An executive order directing the elimination of market-distorting subsidies for solar sits awkwardly against a programme whose largest single use is subsidising solar installations on farms and rural businesses.

19 August 2025 — the unnumbered letter

The Rural Business-Cooperative Service issued an unnumbered letter setting out revised policy for REAP and the Business & Industry Guaranteed Loan Program. It did not close either programme. It narrowed eligibility for a specific category of project.

Under that guidance, REAP loan guarantees became unavailable, and grants deprioritised, for projects that include:

• ground-mounted solar photovoltaic systems larger than 50 kW;
• ground-mounted solar photovoltaic systems that cannot document historical energy usage;
• ground-mounted solar photovoltaic systems sited on certified cropland; and
• solar photovoltaic systems incorporating components from a country designated as a foreign adversary under 15 CFR 791.4.

These four conditions matter more than the grant pause for many applicants, because they are substantive eligibility rules rather than a timing problem, and because they will almost certainly be carried into the rewritten regulation rather than reversed by it. A project that fails one of these tests does not become fundable when the grant window reopens.

The policy direction embedded in that letter is legible. USDA is steering REAP away from large ground-mounted arrays on productive farmland and toward right-sized systems that serve a documented on-site load. The historical-usage requirement is the clearest signal: it converts REAP from a programme that will finance generation capacity into one that will finance the offsetting of demonstrated consumption.

12 February 2026 — the priority points letter

The Rural Business-Cooperative Service Administrator issued an unnumbered letter on Administrator Priority Points for projects advancing national economic, energy, agricultural and programme integrity objectives. This realigned scoring preference toward domestic manufacturing and energy security.

For applicants this is a scoring signal rather than an eligibility rule, but it indicates what the agency will reward when competitive grant scoring resumes.

31 March 2026 — the pause

The Rural Business Cooperative Service issued a stakeholder announcement stating that it intends to update the regulations at 7 CFR Part 4280 Subpart B to comply with Executive Order 14315, and that accordingly REAP will not be making further grant awards until the new regulations are in effect.

The announcement committed to publishing a new Notice of Funding Opportunity once the amended regulations take effect, and stated that applicants who previously submitted an application will have the opportunity to reapply. It specified that this applies to any applicant that does not possess a fully executed Financial Assistance Agreement.

And it stated plainly: REAP guaranteed loans will continue to be awarded during this time.

15 April 2026 — the rescission

The Notice of Funding Opportunity published 16 October 2024, which had announced acceptance of grant, guaranteed loan and combined applications for fiscal years 2025, 2026 and 2027, was rescinded effective immediately.

This is the step that converted the pause from an administrative slowdown into a reset. With the governing notice withdrawn, there is no published scoring framework, no deadline schedule, and no cost-share table in force for grants. The programme's grant stream is not merely paused; its operating instructions have been withdrawn pending replacement.

What is definitely still available

It is worth being explicit, because the volume of contradictory information on this subject is high.

REAP guaranteed loans. Open. Year-round applications. Up to 75% of total eligible project costs. 80% guarantee to the lender. Up to $25 million. Terms to 40 years. This is not a workaround or a technicality — it is a fully operating federal credit programme that happens to sit beside a paused grant programme.

Energy efficiency projects. Efficiency improvements — HVAC replacement, lighting, refrigeration, insulation, grain dryers, irrigation efficiency, process equipment — remain fundable through the loan path and are largely untouched by the solar-specific restrictions. For many rural businesses the efficiency case was always stronger than the generation case on pure economics, and the current environment makes that comparison sharper.

Non-solar renewables. The eligibility restrictions target ground-mounted solar photovoltaic specifically. Anaerobic digesters, biomass, geothermal, hydropower below 30 megawatts, hydrogen and wind sit outside those four conditions — though see the separate biodigester pause below, and note that wind is squarely within the executive order's stated scope even if the August 2025 conditions did not name it.

Roof-mounted and right-sized solar. The four restrictions apply to ground-mounted systems. A roof-mounted array sized to a documented historical load is a materially different application from a ground-mounted array on cropland, and the guidance treats it that way.

Projects with a fully executed Financial Assistance Agreement. If your grant agreement is signed and executed, you are outside the pause. The announcement was explicit that the reapplication requirement applies to applicants who do not hold one.

What is not available

New grant awards. None will be made until the amended regulation is in effect.

Energy Audit and Renewable Energy Development Assistance grants. USDA has confirmed EA and REDA are not funded in 2026. If your project requires an energy assessment — and energy efficiency projects generally do — plan to procure and pay for it privately rather than waiting for a USDA-funded audit that is not coming this year.

Combined grant and loan packages. With the grant stream paused, a combined request cannot be assembled. Projects must be restructured around the loan alone plus borrower equity.

Certainty about the reopening date. USDA has committed to publishing a new notice once the regulations are effective. It has not published a date. Rulemaking of this kind typically involves a proposed rule, a comment period and a final rule, and that sequence rarely completes quickly.

The biodigester and controlled environment agriculture pause

Separately from the REAP rule rewrite, USDA has paused applications for biodigester and controlled environment agriculture projects. This was communicated through an unnumbered letter addressing programme stewardship, and reported as a 90-day administrative pause driven by delinquency rates in those categories.

This pause is worth understanding as a distinct phenomenon from the solar restrictions. The solar restrictions are policy-driven, flowing from an executive order about energy subsidies. The biodigester and CEA pause is credit-driven — it reflects portfolio performance in those sectors, and it sits alongside broader concerns about delinquency across USDA's guaranteed portfolio.

For a project in either category, the practical consequence is the same: the application will not move now. But the analytical consequence differs. A solar project needs to be restructured to meet eligibility conditions. A biodigester or CEA project needs to demonstrate creditworthiness against a sector the agency currently regards as having underperformed — which is fundamentally a feasibility and underwriting problem, not a compliance one.

What happens to your pending application

The announcement addressed this directly, and the answer depends on one thing.

If you have a fully executed Financial Assistance Agreement, your award stands. The reapplication requirement does not reach you.

If you do not, you will need to reapply once the amended regulations take effect and a new Notice of Funding Opportunity is published. USDA stated that previous applicants will have the opportunity to reapply, which is a commitment that the pause is not a rejection — but it is a reapplication, not a resumption. Your position in a queue does not carry forward.

There are practical implications worth acting on now rather than later.

Your quotes will expire. Equipment pricing, installation quotes and contractor availability secured for a 2025 or early 2026 submission will not hold through a rulemaking cycle. Expect to re-procure.

Your scoring may change. The new notice will publish new scoring criteria reflecting the amended regulation and the February 2026 priority points direction. A project optimised for the previous scoring framework may score differently under the next one.

Your eligibility may change. If your project involves ground-mounted solar, the four conditions from the August 2025 letter are the most likely floor for what the new regulation will contain, not a ceiling. Assume they persist.

Your environmental review does not necessarily expire. Environmental documentation prepared for the original application generally retains value. Note separately that USDA adopted a final rule modernising its National Environmental Policy Act procedures in May 2026, using 7 CFR 1b to determine compliance, which may affect how new reviews are conducted.

What the rewritten regulation is likely to contain

USDA has not published a proposed rule, so what follows is inference from the direction of travel rather than reporting. It is offered as planning guidance and should be treated as such.

The four solar conditions will very likely be codified. The August 2025 letter established them as policy through sub-regulatory guidance. A rule rewrite driven by the same executive order is the natural vehicle for putting them into the regulation itself. Planning on their reversal would be unwise.

Domestic content requirements will likely tighten. The foreign-adversary component restriction under 15 CFR 791.4 is already in force. The executive order's framing — "foreign controlled energy sources" — and the February 2026 priority points direction toward domestic manufacturing both point the same way.

Cost-share may be reduced. There has been persistent signalling that the 50% IRA-funded cost share may fall toward the 25% Farm Bill level. Applicants modelling a project on a 50% grant should stress-test it at 25%, and at zero.

Right-sizing will be enforced. The historical-usage documentation requirement is the mechanism. Expect the amended regulation to make load documentation a formal condition rather than a scoring preference.

The guaranteed loan stream will probably be less affected. It is administered under 7 CFR Part 5001 rather than Part 4280 Subpart B, which is the part being rewritten. The eligibility conditions from the August 2025 letter reach it, but the structural mechanics of the loan guarantee sit in a different regulation that is not the subject of this rewrite.

One further constraint applies regardless of what the new rule says. Under section 22002(c) of the Inflation Reduction Act, the Secretary may not enter into a loan agreement that may result in a disbursement after 30 September 2031, or a grant with an outlay after that date. Projects with long construction timelines should be modelled against that ceiling.

What to do now, by situation

If you were planning a solar project

Establish first whether your system is ground-mounted or roof-mounted, and whether it exceeds 50 kW. Those two facts determine which regime you are in.

If ground-mounted and above 50 kW, the loan guarantee is unavailable to you under current guidance and the grant is deprioritised. The realistic options are to resize the system to serve documented load, relocate it off certified cropland and off the ground, or finance it outside REAP.

If you can document historical energy usage supporting the system size, do so now and do it properly — metered consumption data across a full seasonal cycle, not an estimate. This is the single most important piece of documentation in the current REAP environment and it takes time to assemble.

Confirm component origin. A system incorporating components from a designated foreign adversary is ineligible regardless of every other merit. Get this in writing from your supplier.

If you were planning an efficiency project

You are in the strongest position of any REAP applicant. Efficiency projects sit largely outside the restrictions, and the guaranteed loan path is open now.

Commission your energy audit privately. EA and REDA grants are unfunded this year, and an audit is a practical prerequisite for an efficiency application. Treat the cost as a project cost rather than waiting for a grant that will not arrive.

If you were planning a biodigester or CEA project

The application will not move during the pause. Use the interval to strengthen the credit case rather than the compliance case. The pause was driven by portfolio delinquency in these sectors, which means the agency's concern is repayment capacity, not eligibility. A project that can demonstrate durable feedstock supply or offtake, realistic yield and pricing assumptions, and coverage that survives a downside case is addressing the actual objection.

If your project was structured on a combined grant and loan

Rebuild the capital stack around the guaranteed loan plus equity. Model the project at zero grant. If it works at zero grant, proceed now through the loan path and treat any future grant as upside. If it only works at a 50% grant, the project needs rethinking irrespective of USDA policy — a project that requires half its cost to be donated is thinly conceived.

If you hold an executed Financial Assistance Agreement

Proceed. Meet your conditions, document your drawdowns carefully, and be aware that the enforcement environment across USDA guaranteed lending has tightened considerably. Compliance that would have passed loosely two years ago is being examined more closely now.

What this means for feasibility analysis

Every one of these developments increases the analytical burden on a REAP application, and in a specific direction.

Load documentation has become an analytical requirement rather than a supporting exhibit. A system sized against documented historical consumption is a fundamentally different submission from one sized against available roof or ground area. Establishing the load, seasonally and across a full cycle, is now foundational.

Right-sizing must be demonstrated, not asserted. The analysis has to show why the proposed system capacity matches the demonstrated need, and a system materially larger than the documented load will attract scrutiny it would not have attracted in 2023.

Credit quality carries more weight than it did. With over $1 billion in delinquencies across USDA's guaranteed portfolio and ten lenders removed from the OneRD platform in May 2026, the agency and its remaining lenders are underwriting more conservatively. Coverage analysis, sensitivity treatment and the realism of revenue assumptions are receiving closer attention.

Sector risk is being priced explicitly. The biodigester and CEA pause is an agency signal that it regards those sectors as having underperformed. A project in a sector under scrutiny needs to address that scrutiny directly rather than hope it goes unmentioned.

Independence matters. USDA feasibility work must be prepared by a third party with no financial interest in the outcome. In a tightening enforcement environment, a study prepared by a party to the transaction — an equipment supplier, a developer, a broker — is a liability rather than an asset.

Frequently asked questions

Sources

1. Executive Order 14315, Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources, 7 July 2025.
2. USDA Rural Business-Cooperative Service, unnumbered letter on REAP and B&I renewable energy eligibility, 19 August 2025.
3. USDA Rural Business-Cooperative Service, Administrator Priority Points unnumbered letter, 12 February 2026.
4. USDA Rural Business Cooperative Service, Stakeholder Announcement on REAP regulations, 31 March 2026.
5. USDA Rural Development, REAP frequently asked questions, 31 March 2026.
6. Notice of Funding Opportunity for the Rural Energy for America Program for Fiscal Years 2025, 2026 and 2027, 90 FR, 16 October 2024 (rescinded 15 April 2026).
7. 7 CFR Part 4280 Subpart B, Rural Energy for America Program.
8. 7 CFR Part 5001, OneRD Guarantee Loan Initiative.
9. 15 CFR 791.4, foreign adversary designations.
10. Inflation Reduction Act, section 22002.
11. USDA Rural Development, Rural Energy for America Program guaranteed loan programme page.

Prepared by the research team at usda-feasibility-study.com. Regulatory position current as at the date below. USDA guidance in this area is changing rapidly; verify against the agency's published notices before relying on any detail. Last updated: 29 July 2026.