Follow the money: Grant & loan funding
“Grants can address specific projects or challenges for your farm or food business. These funds are not ‘free.’ They often come with requirements. It’s important to know how to navigate that terrain,” said Laura Biasillo (CCE Broome), exploring what funding can accomplish for farm operations.
What to Look For
Finding appropriate grant programs is key. Most searches fall into specific categories or themes. Biasillo shared some: adding value and increasing farm viability; on-farm research; farm energy conservation; alternative energy; and environmental protection and conservation. Target the scope of the search to what makes sense, directionally.
An important part of this assessment is what is prioritized by the grant program. Is it new production practices, trialing a new variety or building infrastructure? Do the goals of the grant program align with the farm operation and the goals of the project? Biasillo gave some program examples: the NY Grown & Certified Farmer Grant, the John May Safety Fund and AEM funding (Agricultural Environmental Management) funding (information can be secured through a local SWCD).
Most have a regular schedule for application review, proposal review and release of funds – the process can take months – with review alone taking up to half a year. Grants are typically not ideal for projects that need a quick turnaround period.
Eligibility
There is much to assess when discussing eligibility, from business structure to personal capacity to recordkeeping and finances, and it can affect what programs to pursue.
USDA has a different requirement set than the FSA; FSA makes direct and guaranteed farm ownership and operating loans to operators who cannot obtain commercial credit from a bank, Farm Credit institution or other lender. FSA loans can be used to purchase land, livestock, equipment, feed, seed and supplies. Loans can also be used to construct building or make farm improvements.
Begin with a farm history and plan. Biasillo shared a great tool from University of Minnesota, available at agplan.umn.edu.
Budget, Budget, Budget
All grant programs are reimbursement-based. The farmer needs to showcase financial literacy and planning for the farm with a pattern of solid recordkeeping, financial projections proving they can process the farm’s annual financial trends, farm and project budgets and a documented plan to fund program costs. Often a budget template or tool is supplied by the program or lender (frequently an Excel file or something similar).
Read the Request for Proposal (RFP) to understand what project costs are eligible, ineligible and what the match requirements are. There are variables: be aware that costs incurred before the application will not be reimbursed and costs may evolve over time. If a match is required, understand how the program calculates the amount and how it must be documented. All proposed costs must be documented by the applicant.
Document It
The list of required documentation can seem daunting at first, but it’s easy to navigate with a plan. Information such as the business’s structure (LLC, C-corp, S-corp) documentation, Schedule F paperwork, an adjusted business plan incorporating the project and other documents should be within reach for submission.
What’s the Plan?
What niche is this project going to fill for the farm operation? What issue will it tackle? A dairy farm might pursue funds to add a slurry pit at the end of their barnyard to make their manure handling more efficient and keep their herd in a cleaner environment.
A beef operation might use funds to add water hookups throughout their rotational grazing operation, giving them greater flexibility and enhancing the livestock’s quality of life.
It’s important to include the farm-level ripple effect in the project plan, as that’s what funders want to see: how will the project impact labor, production, profit share and more?
From a staffing perspective, do you have a team that’s able to execute this project? “Grants may require certain other skills that you don’t have,” Biasillo noted. “How will you ensure you can meet [the program’s] goals and also implement your project?”
A SWOT (strengths, weaknesses, opportunities, threats) analysis can be helpful when building the project plan. Biasillo shared an example – an apple orchard with the aim of purchasing and installing a small cold storage unit to extend the apple sales season.
A strength – an established orchard with 15 acres of mature apple trees producing consistent yields.
A weakness – limited cold storage capacity currently restricting sales to the immediate harvest period.
An opportunity – increasing consumer demands for locally grown apples and value-added apple products.
A threat – weather variability, including late spring frosts that may impact apple yields.
The analysis can be applied to any project – dairy and beef sales, agritourism operations and more.
Some programs will ask for support letters. Support from the community is paramount with any major operational change, as they’re who the farm depends on for survival: buyers, lenders, agricultural agencies and more.
Who cosigns the idea? Who will advocate for the business throughout the implementation process?
Biasillo shared program examples that require support letters: SARE Farmer Grants and the Northeast Dairy Processor Expansion Grant.
Bringing it Together
After the farmer has vetted the idea and acquainted themself and their team with the process, the pieces are in reach. Applicants should lean into the funding connections at their disposal. Connect with local Cooperative Extension offices, the local USDA office, the local Farm Bureau chapter and any additional organizations that might go to bat for the farm and project funding. The experts are there to help.
by Andy Haman
