Rural Business Assistance Programs
Frequently Asked Questions
2016 Maryland Value Added Producer Grant
(Capital Assets Option)
Who can apply?
Farmers, forest products operations, and seafood processors who plan to expand or diversify their operations with “value-added” products. Agricultural cooperatives may also apply. The business must have been in operation for at least two years.
Is there a minimum or maximum amount of grant funds that I can get?
The minimum is $2,500 and maximum is $15,000. The funds must be matched on at least a one-for-one basis with funds provided by the grantee.
When do I have to apply? When will I have an answer?
We must receive your completed application by Tuesday, October 18, 2016. Applications received in the mail with a Friday, October 14, 2016 postmark will also be accepted. Grant announcements should be made in November 2016.
What projects may qualify for funding?
Capital asset-type projects designed to help farmers, forest product operations, and seafood processors to expand or diversify their business operations. This includes, but is not limited to, the following:
- Production buildings and major fixtures
- Livestock or seafood processing facilities
- Fruit, vegetable, or wood processing facilities
- Creamery processing equipment
- Manure digesters
- Optimization systems for maximizing fiber yield recovery
- Dry kilns, shavings mills, sawdust dryers, and in-woods chippers
The capital asset being purchased must also have a useful life of at least seven years.
What projects specifically do not qualify?
Common agricultural implements such as tractors, combines, pick-up trucks, and other such farm vehicles are not eligible to be funded under this program. Commercial banks, farm credit associations, and MARBIDCO have loan programs available that help to finance these purchases. An individual piece of equipment costing less than $5,000 is also not likely to be eligible unless it is an essential purchase relating to a larger value-added project.
Ineligible expenses include, but not limited to, the following:
- Any expense incurred prior to Tuesday, October 18, 2016.
- Any expenses that do not directly relate to the value-added product
- Tractors, combines, sprayers, or similar common farm implements and attachments thereto
- Any self-propelled vehicles except certain vehicles used in timber processing
- Property acquisition costs
- Mortgage refinancing
- Cost of borrowing (points and other fees)
- Site plan and construction permits
- Wages paid to applicant or employees
- Solar or wind energy projects
- Furnishings, fixtures, or equipment considered personal (non-business) property
- Machine storage, workshops, housing, classrooms, etc.
- Any portion of expense for which the applicant pays a contractor in merchandise or service in lieu of cash
- Attorney’s fees and consultant’s fees
- Fees and/or costs not consistent with eligible costs
Do these funds need to be repaid?
No, as long as you complete the project as approved by MARBIDCO.
Does the size of my operation make a difference?
Any size operation can apply, as long as you have been in business for at least two years and meet the other requirements.
Do I have to do business in Maryland?
Yes, the project must be located in Maryland. Applicants must agree to a site inspection prior to final approval, but it is possible that not every project site will be inspected initially. If you receive grant funds, you must agree to site inspections during the construction phase of the project.
What must be included with my application?
Proof of matching funds equal to the grant funds requested
- Tax return for the most recent year (including a Schedule F, Form 1120S, or Schedule C)
- Business plan showing: (a) how the production facility or business operation will remain ongoing for at least seven years; (b) how the project will increase sales, retain or add jobs, etc.; (c) the market(s) to be served and project cost estimates, and (d) how you will comply with all governmental requirements.
For more on developing a business plan contact your local extension agent or SBDC office, or see http://www.marbidco.org/business/BusinessPlanningGuide.pdf.
Can I use grant funds of capital equipment that I intend to expense in one year?
No, the business plan must show how the project will remain ongoing for at least seven years and so, cannot be expensed in less than that time. All equipment purchased with grant funds must have an anticipated useful lifespan of at least seven years.
Can I use salary costs as the matching funds, and use grant funds to pay for the equipment?
No, both the grant funds and the matching funds are for capital assets only. Matching funds must be in cash for at least 50% of the cost of the capital asset. Approved bank loans can also qualify as matching funds.
Does it have to be a single piece of equipment?
No. For example, you might need equipment and a building to house it.
Can I use grant funds to hire someone to operate the equipment?
No. Grant funds can be used only to purchase the equipment or facility.
How closely related to my current operation does the new project have to be?
The intent is to encourage business expansion or diversification. The important thing is that you show in your business plan that you have the knowledge and resources to make the project successful.
Do I have to spend the grant funds all in one year?
Yes. If you are selected to receive a grant, your grant agreement will outline the deadline for funding.
What if I don’t spend all the funds?
Any funds you don’t use during the grant period will be forfeited.
Can I spend the grant funds first, and then the matching funds?
No. Matching funds must be spent at a rate equal to or greater than the rate at which grant funds are expended.
How do I receive the grant funds and what do I have to report?
As you complete the project, you’ll need to provide invoices or other documentation of the actual costs incurred. For every eligible invoice you submit, MARBIDCO will send you a check for HALF the invoiced amount (it is assumed the other half will be paid by the dollar-for-dollar matching funds required by the program).
What if I received a Maryland Value-Added Producer Grant (Capital Assets Option) from MARBIDCO previously?
- Your previous grant fund account must be closed out (i.e., no funds remaining) before you can be considered for a new grant; and
- You may not receive more than $30,000 in aggregate funding from this program.
- The maximum cumulative amount of grant funding a single applicant may receive from all MARBIDCO grant incentive programs is $50,000.