Business Builder
Subaward Grant Program

Q: Are equipment purchases, including vehicles, allowed under the Business Builder Subaward grant program?

A: Equipment is defined as tangible personal property that has a useful life of more than one year and a per-unit acquisition cost of $5,000 or more. Purchases less than $5,000 are considered supplies.

For a purchase that fits the equipment definition, the next consideration is whether it is general or special purpose equipment.

Special purpose equipment serves a technical purpose supporting program goals. Purchases that support producer access to new markets and/or benefit local and regional supply chains are generally allowable. Special purpose equipment purchases (new or used) may support:  

1. Transportation, processing, aggregation, or storage investments;  

2. Value chain/supply chain innovation or upgrades, including equipment or technology upgrades or investments to support process adaptations; and,  

3. Product development, packaging, and marketing of agricultural products.

All such special purpose equipment purchases must be used only for the stated purposes. They must also be justified in the applicant’s description of the project and budget. Include detailed equipment specifications as much as possible to make clear what it is you propose to purchase (See RFA Appendix D: Sample Budget: English, Spanish). 

Equipment purchased by Business Builder subawardees must be approved and monitored by grant administrator the University of Nebraska Lincoln (UNL), as required by 2 CFR § 200.313.

Q: What kind of equipment is not allowable?

A: Business Builder Subaward funds can be used to rent or lease general purpose equipment. They cannot be used to purchase general purpose equipment or have a lease-to-own agreement.

General purpose equipment is tangible personal property costing $5,000 or more that does not have a special technical purpose related to Business Builder program goals; unlike special purpose equipment (see previous question).

Please note: Allowable lease or rental costs associated with general purpose equipment are considered indirect costs. Indirect costs are facilities and administrative costs that benefit more than one objective; they are not specific to the proposed project. No documentation is required to justify indirect costs.

The application’s Budget Addendum includes an Indirect Costs section. Applicants may budget up to 10% of modified total direct costs (MTDC) to cover indirect costs. MTDC is the sum of direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward. An example is provided in the Sample Budget. See Apply Here page.  

Q: Will the Business Builder Subaward cover items, such as chairs and desks for the office or tables and tents at a farmers’ market?

A: Such items, less than $5,000, are considered supplies when directly related to the project.

Examples are a tent needed specifically for a marketing project that involves attending trade shows or tables and chairs needed for a new on-farm retail shop, for which the business seeks Business Builder funding.

When such items are not specific to the business building project, they cannot be included as supplies. Rather such items, when they serve more general business purposes, are considered indirect costs; they are not directly related to the project. The application’s Budget Addendum includes an Indirect Costs section and instructions for budgeting some funding for indirect costs.

Q: Can we buy used equipment?

A: Yes. Equipment, new or used, is allowable as long as it is special purpose equipment; that is, it serves a technical purpose supporting program goals. Please see previous equipment question for more detail. Note: Equipment starts at $5,000 and above. If less than $5,000, it goes to supplies category.

Q: Do I need to provide competitive bids for purchases?

A: If funded, subawardees will be required to submit 3 competitive pricing or rate quotes for equipment and contractual items $10,000 and greater. Pricing and rate quotes (2-3) are also recommended for purchases less than $10,000. No pricing or rate quotes are needed for purchases less than $5,000.

While not required at time of application, price quotes are helpful for making sure applicants put realistic and reasonable numbers into their budgets. Getting price quotes early, and describing them in your budget narrative, can help you communicate to reviewers that you have done your research.

Subawardees are not required to use the lowest price bid. They must include reasons for choice they make.

Sole source purchases are possible. A sole source purchase is one where only one vendor can provide an item or service, so it is not possible to obtain competitive bids. The applicant must provide written justification and obtain approval from grant administrator UNL before purchasing. 

Q: What happens to equipment after the grant ends?

A: It depends.

No action is needed at the time of closeout if equipment acquired with Business Builder subaward funds continues to be used for the original project, program, or related activities. 

When equipment is no longer in use, and the value of the equipment falls below a fair market value of $5,000, the Business Builder subawardee may retain, sell, or otherwise dispose of the item with no further responsibility. 

For equipment no longer in use with a fair market value greater than $5,000, the Business Builder subawardee will work with grant administrator UNL to follow UNL guidelines for equipment disbursement. 

Q: Will this grant pay for items already purchased?

A: The grant will not cover any prior purchases. All expenses outlined in the project plan and budget must be made only after completing the Business Builder Subaward agreement with grant administrator UNL. This is a contractual step that takes place soon after award notification.

Q: Are construction costs allowable?

A: Construction costs are not allowed. The only exception is installation of certain required equipment, such as wash tanks or coolers. Note: Applicants who request funding for such equipment should already have a location available for installation. 

For Business Builder subawards, minor improvements, rearrangements, or alterations of an existing building or facility to accommodate new or upgraded special purpose equipment are allowable. Building related materials and labor are allowable if they are needed for special purpose equipment.

If the minor renovations involve any of the below, the project is unallowable as it will require a National Environmental Policy Act (NEPA) review.

• Ground disturbing activities;
• Vegetation or habitat removal;
• Alter a structure greater than 50-years of age or the general aesthetic of the property;
• An adjacent river, stream, or water body;
• Permanent increase in noise, odor, or traffic as a result of the project;
• Increase emissions of carbon dioxide, methane, and/or nitrous oxide (increased use of internal combustion engines, manure management, etc.)

Q: When and how do I receive money to cover expenses?

A: The Business Builder Subaward is a reimbursement grant. That means subawardees must pay for budgeted goods and services before they can request funds from grant administrator UNL to cover those expenses. 

Once awarded, subawardees will receive an orientation and support materials regarding the reimbursement process. Subawardees may claim expenses by submitting invoices, with documentation, for reimbursement. Documentation includes itemized receipts for purchases; event information, such as agenda, for attendance at trainings, trade shows and the like; and pricing/rate quote information for purchases $5,000 and above (more detail in Question: Do I need to provide competitive bids for purchases?). 

Subawardees must submit invoices at least quarterly. Monthly is highly encouraged to avoid losing track of documentation you will need. The turnaround time for payment from UNL is three to four weeks after subawardees submit invoices that are complete and include documentation. 

See RFA Appendix C: Sample Invoice and Documentation. English, Spanish

Q: What if I cannot afford to wait for reimbursement?

Subawardees who are “loan ready” may want to seek financing from a third party to cover expenses ahead of reimbursement and/or pay for other project costs. In those cases, the Business Builder Subaward agreement, which subawardees receive from grant administrator UNL to finalize the award, may be helpful as a guaranteed source of income (contract). 

Getting a loan, however, is not always advisable. It involves taking on debt; it must be re-paid. Loans also include fees and interest.

Loan readiness includes a credit score and business track record that fit a lender’s requirements. Different lenders have different requirements. Most lenders are unfamiliar with financing small food and farm businesses in local and regional food markets. Some community development lenders are more flexible than banks. Some lenders have grant award loan programs.

Should you decide to explore financing, work with a technical assistance provider to assess your readiness and prepare. Connect with a Heartland Center TA provider.

Resources for finding community development lenders include:

• SBA List of MicroLenders
• Opportunity Finance Network CDFI Locator