This post is part of a series of posts designed to help you acquire a loan for your small business. The following posts cover methods for public financing of your small business

Value-Added Producer Grants (VAPG)

Grants help producers expand their customer base by entering into emerging markets for their products or commodities and ensure that a greater portion of the revenues derived from the value-added activity is available to the producer.

Independent producers, farmer-owned cooperatives, agricultural producer groups and majority- controlled producer-based groups are eligible to apply. For reserved funds competition additional eligibility requirements are: beginning farmer or socially disadvantaged farmer or rancher, mid- tier value chain/local or regional supply network or possible advantages to HTVC projects.

Five categories are considered value-added under this program.

  • Ventures in which agricultural producers add value to their products through changing the physical state or form of the product (processing wheat into flour, corn into ethanol, slaughtering livestock).
  • Producing products in a manner that enhances its value demonstrated in a business plan (organic carrots).
  • Physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that product.
  • Any agricultural commodity or product that is used to produce renewable energy on a farm or ranch (methane digesters, wind turbines).
  • Aggregation and marketing of locally produced agricultural food commodoties or products (less than 400 miles from where produced and in the same state).

Planning grants can be awarded for such activities as conducting feasibility analyses, developing business and marketing plans. Working Capital grants may be used for expenses associated with operations while the venture develops cash flow. Some things that grant funds cannot be used for:

The maximum allowable grant amount is $100,000 for planning grants and $300,000 for working capital. Grant recipients must provide 1-to-1 matching funds. Projects must be completed within two years.

CREDITS: This is an excerpt from A Guide to Starting a Business in Minnesota, provided by the Minnesota Department of Employment and Economic Development, Small Business Assistance Office, Twenty-eighth Edition, January 2010, written by Charles A. Schaffer, Madeline Harris, and Mark Simmer. Copies are available without charge from the Minnesota Department of Employment and Economic Development, Small Business Assistance Office.