On Small Business Saturday American Express offered both consumers and business owners the opportunity to buy from a local business.  It’s a great incentive to play a role in helping to grow the engine of economic prosperity: small business.

There are other incentives available to businesses that want to play an even greater role in the development of local businesses in the agricultural sector.

The United States Department of Agriculture Rural Development program offers significant financial incentives for companies and organizations that support local rural development.  Rural Development has a portfolio of $115 billion in loans and plans to administer $20 billion in loans, loan guarantees and grants during FY2011 which runs from October 1, 2010 through September 30, 2011. 

Currently, the USDA budget is operating on a temporary extension which expires on December 3^rd.  It is unlikely that that a final budget will be prepared any time soon as the appropriations are still at the committee level in both the House of Representatives and the Senate.  When it comes to Rural Development, however, the two congressional chambers are not that far apart.  The House proposed appropriating $2.748 billion and the Senate $2.768 billion. 

Some grants to consider once funding is finalized for the current fiscal year include:

The REAP program provides up to 25 percent of total eligible costs for energy audit s and renewal energy development assistance.  For feasibility studies, the grants are limited to a maximum of $50,000. 

In order to qualify, your business must generate at least 50 percent of its gross revenues from agricultural operations.  If your business is located in a rural area and generates less than 50 percent of gross revenues from agriculture, it may still apply.  Examples of feasibility studies that qualify for the program include “projects that will produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources.  The energy to be produced includes, heat, electricity, or fuel.”

Rural Business Opportunity Grants (RBOG)

The RBOG program targets cooperatives with mainly rural members. It awards grants of up to $50,000 for projects that serve one state and up to $150,000 for projects that serve more than one state.  The program promotes sustainable economic development.  The funds can be used for training and technical assistance.

Small Socially-Disadvantaged Producer Grant (SSDPG)

The SSDPG program offers grants of up to $200,000 to small agricultural producers through eligible cooperatives.  In 2009, 10 awardees received a total of $1.4 million.  In that case, 75 percent of the board members of the winning cooperatives had an average of $250,000 or less in sales over the previous three years. That gives an idea of the scale of business the program supports.

Value-Added Producer Grants (VAPG)

The VAPG program offers grants to “independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures.”  The purpose of the program is to offer grant funding for renewable energy projects that are farm-based and for marketing expenses to promote value-added agricultural products.  The funds may be used at different stages of qualifying projects, even for early stage planning. 

Rural Business Enterprise Grant (RBEG Program)

The RBEG program offers funding to develop distance learning projects and adult education programs that target small, rural businesses.  While there is no maximum award limit, grants range from $10,000 to $500,000.  This grant is available to non-profit organizations (and local government entities).  This particular grant is not available to businesses. Non-profit organizations (as well as certain local government entities) may apply.

Applying for grants

The grants portion of the $20 billion is administered by local Rural Development offices across the country.  This Rural Development office locator can direct you to the office nearest to you.