Maryland Value Added Producer Grants for Capital Assets Now Available From MARBIDCO

ANNAPOLIS (August 9, 2011)…. The Maryland Agricultural and Resource-Based Industry Development Corporation (MARBIDCO) has announced a grant funding opportunity to encourage Maryland's agricultural producers to expand or diversify their business operations by installing capital assets to make a product that is “value added". Eligible applicants must be a crop or livestock producer or processor, agricultural cooperative, seafood processor, or primary or secondary timber products processor, and have been in business for a minimum of two years. 

Applicants can receive up to $20,000 for projects such as production buildings and major fixtures, livestock or seafood processing facilities, fruit or vegetable processing facilities, timber or wood products facilities, and manure digesters.  Cash matching funds are required, and must be at least equal to the amount of grant funds requested.

The submission deadline for applicants seeking to receive MVAPG-Capital Assets Option grants from MARBIDCO is Monday, October 3, 2011 by 4:00 p.m. (Applications received in the mail with a Saturday, October 1, 2011 postmark will also be accepted). Grant award announcements will be made on or about October 21, 2011. Late applications will not be accepted.

You can access the MVAPG-CAO application form: http://www.marbidco.org. Questions about the MVAPG-CAO may also be addressed by contacting Kristen Robinson, MARBIDCO Financial Programs Officer, at (410) 267-6807.
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MARBIDCO is an agricultural economic development authority established in 2007 with a statewide mission to help Maryland's farm, forestry, seafood businesses achieve sustainability and profitability, and thereby help preserve rural working lands in the process. MARBIDCO offers assistance to qualifying rural businesses in securing affordable capital and credit for farmland purchases and other business projects (often by partnering with commercial lenders). MARBIDCO also offers specialized help and referral with rural business planning and technical assistance needs, and assists with rural working land preservation facilitation (by serving as a financial intermediary for Maryland land conservation organizations). MARBIDCO is particularly focused on promoting rural entrepreneurship and farm energy efficiency, as well as, helping young and beginning farmers to start or expand their business enterprises. MARBIDCO is headquartered in Annapolis.

Frequently Asked Questions
about the
2011 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.  Government or educational organizations may not apply, although they may provide assistance to successful applicants in implementing the project.

Is there a minimum or maximum amount of grant funds that I can get?

The minimum is $2,500 and maximum is $20,000.  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 Monday, October 3, 2011.  You will hear from us on or about October 21, 2011.

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.

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 application submittal, review and approval, and contract execution and approval
• 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 consultants’ 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 do business in Maryland?

Yes, the project must be located at a Maryland location. 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 returns for the last two years (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?

You must spend the funds as proposed in your business plan.

What if I don’t spend all the funds?

You will need to repay any funds you don’t use according to your proposed business plan.

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.  If matching funds are provided in an amount exceeding the minimum requirement, the applicant must spend their matching funds contribution at a proportional rate.  For example, if you receive $20,000 for a $60,000 project, you must spend $2 of matching funds for every $1 of grant funds.

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.  In addition, grantees will agree to site inspections by MARBIDCO during the construction or installation phase of the project, and you may be asked for a brief report after completing the project.

How much money is available? Is this a one-time chance, or will it be an annual program? How often can I apply? 

A total of $160,000 is available for distribution in Fiscal Year 2012.

What if I received a Maryland Value Added Producer Grant (Capital Assets Option) from MARBIDCO in 2010?

• Your 2010 grant fund account must be closed out (i.e., no funds remaining);
• You may not receive more than $30,000 in aggregate funding in both 2010 and 2011.

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