Navigating farm grants can be time-consuming. Fortunately, our team at FarmRaise breaks it down in a way that’s easy to understand. We’ve helped thousands of farmers identify funding for their farms, learning a lot along the way.
Here we explore 3 of the most common “myths” we hear farmers perpetuate about grant funding, and reveal the truth.
Myth #1: The government will take my land if I don’t do exactly as outlined in the farm grant
It’s understandable to be concerned with the fate of your ultimate resource: the land. But, in our database of over 400 state and federal farm grants, we haven’t yet seen a farm grant program that gives the agency the right to take your land if you fail to implement your side of the grant.
Let’s say you get a farm grant. First – you should pop a bottle of champagne to celebrate. After awhile, though, it becomes clear that you can’t implement the things you hoped you could on the farm. Weather, prices, family situations – all of these factors can make it difficult to implement your farm plans. In the case that you can’t fulfill the farm grant, you’ll simply let the government agency know and they won’t give you the funds. Or they’ll extend the contract for a year so that you can try again next year. That’s usually the most common downside scenario you’ll face.
There is a rare scenario that has higher stakes. Let’s say you sign up to get financial assistance from the USDA-NRCS for stewardship projects, but you implement a project without following the NRCS practice standards. And the USDA issues your payment before verifying that you have followed the standards. It’s possible that you will have to “pay back” the amount the USDA issued to you, with a little bit of interest. This is truly the worst case scenario, and it is very uncommon for a farmer to go through this.
The bottom line: The government does not have the authority to take your land from you if you don’t comply with a grant’s standards and policies. You simply 1) won’t get the funding or 2) may have to pay it back, in the rare worst case scenario.
Myth #2: Farm grants are easy, free money that I can use however I want
Many farmers get excited by grants because they think that grants are “easy, free money!” While this is alluring, it’s an oversimplification.
Most farm grants and financial assistance programs are intended to be used for a very specific purpose. When you apply, you need to illustrate what exactly you will use the funding for. There are certain categories of expense that grants cannot be used for, including equipment, land purchase, barn installation, and grain bin construction. Grants are usually oriented towards stewardship, marketing and research projects.
The bottom line: grants are excellent options if you have a stewardship, marketing or research project in mind. But they are almost never free, easy money. You have to have an intention for the funds that you can articulate.
Myth #3: Farm grants put money in my bank account right away
You might think that, once you’re awarded a grant, you’ll get that money in your bank account right away. Sadly, that is typically not the case. With most farm grants, you won’t get the money up front. These programs are structured as reimbursement contracts (ie: you implement the practice and the government pays you).
Grants also take a long time. If you’re looking for quick cash, you’ll need to take out a loan or apply for emergency assistance through the Farm Service Agency. The application review process can take 3 to 12 months for most grants. On top of that, you’ll have to implement the practice / project before you get reimbursed.
The bottom line: Do not fall into the trap of thinking that a grant equals quick money in your bank. Know that you will likely will be reimbursed rather than given funds up front. And, you need to be prepared to wait several months to hear the result of your grant application – grant funds are not quick money.
An exception: The USDA has some programs that allow beginning and underserved farmers to receive 50% of the grant dollars up-front, rather than on a reimbursement basis.
Keeping yourself up to date on how grants are actually awarded and disbursed will help you be a savvy farmer and better prepare you to take advantage of opportunities on the farm. Thanks for reading!