How to Finance a Solar Project

Switching to solar power is one of the best ways to reduce long-term energy expenses, protect against rising utility rates, and increase property value. But for many farmers and rural small businesses, the question isn’t whether solar makes sense, it’s how to pay for it.

Fortunately, there are several financing, funding, and incentive options that can make your solar project affordable and achievable.

1. USDA REAP Grants and Loans

The USDA’s Rural Energy for America Program (REAP) provides grants covering up to 25% of project cost. You must cover at least 75% of the cost yourself (7 CFR §4280.122(a)(3)). Grant requests can range from $1,500 to $500,000 for a renewable energy system like solar (7 CFR §4280.122(a)(2)). REAP also offers guaranteed loans. The REAP grant and REAP guaranteed loan together cannot cover more than 75% of project cost (7 CFR §4280.122(b)(20)).

Under the new rule, REAP pays after the project is finished. Your solar project must be completed 12 to 24 months before you apply. In the first application window, that range is 12 to 36 months (7 CFR §4280.122(a)(1), (a)(6)). So you need to pay for the whole system first, with your own funds or a loan. Plan your financing with that in mind.

A few solar rules matter for financing too. Your business must own the system (7 CFR §4280.120(a)(6)). Ground-mount solar on cropland is not eligible (7 CFR §4280.122(b)(11)).

If you are an agricultural producer or a rural small business, this program can lower your total project cost and improve project payback (7 CFR §4280.120(a)(4)). Not sure if you qualify? Try our eligibility tool.

2. Federal Tax Incentives

The federal Clean Electricity Investment Credit, often called the ITC, lowers the federal income tax a business or farm owes dollar for dollar. Solar systems under 1 megawatt (AC) can qualify for a 30% credit (IRS). The credit ends for solar placed in service after December 31, 2027, unless construction began by July 4, 2026 (IRS Notice 2025-42). Combined with USDA funding, this incentive can reduce your total project cost.

3. State and Local Incentives

Many states and utilities offer rebates, performance payments, or additional incentives for renewable energy systems. These can stack on top of federal and USDA programs for even greater savings.

4. Traditional and Green Financing Options

Beyond grants, you can also explore:

• Bank loans with USDA loan guarantees
• Specialized green financing programs
• Power Purchase Agreements (PPAs) for businesses wanting minimal upfront investment

Keep in mind that REAP requires your business to own the system. A system owned by someone else under a PPA or lease cannot get a REAP grant, and lease payments are not an allowable cost (7 CFR §4280.120(a)(6); 7 CFR §4280.125(b)(6)).

CGF partners also have access to exclusive financing options, making it easier to bridge the gap between grants, incentives, and out-of-pocket costs. This means less financial burden up front and a faster path to project completion.

Why Financing Solar Is Worth It

Solar is a long-term strategy for lowering energy costs and protecting against utility rate inflation. With the right mix of grants, incentives, and financing, your system can often pay for itself in just a few years.

At CGF, we aid in building custom financing strategies for farms and rural businesses. From application support and documentation to securing the best funding mix, we make the process simple and effective.

Financing a solar project doesn’t have to be overwhelming. By combining USDA REAP funding, federal tax credits, state incentives, and CGF’s partner financing options, you can install a solar system that delivers long-term savings and strengthens your business.