Working Capital Grant Template Instructions

The USDA recently announced the availability of $27.7 million in 2003 for the Value-Added Agricultural Product Market Development Grant Program (VADG).  Kansas State University’s Value-Added Business Development Program has developed application preparation templates to help those interested in applying for the VADG that meet the expectations of USDA.  The templates are in Microsoft Word format and are structured to guide you in completing all the components of the application process in one single step. 

Four important instructions before using the template:

1. Download a copy of the Notification of Funding Availability (NOFA) fromhttp://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/03-22506.htm
2. Print a copy of the template since it has been formatted to delete the instructions when you start typing.
3. There are two types of applications supported by the NOFA: Planning and Working Capital.  Decide which application you are submitting because you cannot apply for both.
4. All applicants must have a DUNS number before they can submit an application. Here is information about obtaining a DUNS number:
   http://www.rurdev.usda.gov/rbs/coops/dunstreet.html

To use the template, just click on the highlighted segments describing what information you need to provide and start typing your information.  When you finish providing all the information, please move your cursor to the page with Table of Contents, right click and select “Update Field” and “Update Entire Table”.  You are now ready to print or email your application to the relevant authority.  

Please note that the narrative portion of your application cannot exceed 35 pages!

Please remember to save your document intermittently!

K-State VABDP will be happy to review your application and provide some feedback to help you present a winning application.  If you want to take advantage of this, please make sure you send your draft application as an attachment in an email to David Coltrain (coltrain@agecon.ksu.edu) at leastone week before the closing data for the application, i.e., 4:00 EST on October 20, 2003.

If you have questions about the NOFA or the application, please contact:

Larry Carnahan 
USDA Rural Development
PO Box 437, 115 West 4th Street
Altamont, KS 67330
phone: 620-784-5431
fax: 620-784-5900
email: larry.carnahan@ks.usda.gov

State Office:

USDA Rural Development
Community and Business Programs
1303 SW First American Place
Suite 100
Topeka, KS 66604-4040

Template Instructions

1. The template is formatted by the outline that is suggested by the NOFA.  The NOFA explains what sections are to be included in your proposal and what is to be included in each section.  The font for the written proposal must be Times New Roman 12 pt. 

2. There are two distinct categories for applications: (1) Planning grants and (2) Working Capital grants.  A Planning grant focuses on the viability of a potential value-added venture including feasibility studies, market studies, marketing plans, business plans and legal evaluations.  A Working Capital grant is used to fund a business venture and pay the normal expenses associated with the operation, but not to purchase or build facilities or to purchase processing equipment.  Clearly define whether an application is for a Planning grant or a Working Capital grant.

3. The template sections have highlighted descriptions that tell you what to write about.  The main sections are the Proposal Summary (not to exceed 1 page), Eligibility (not to exceed 2 pages), and Proposal Narrative (not to exceed 35 pages).  The Appendix can include important financial information and does not count toward the 35 page limit.  Everything else, including letters of support and verification, should be included in the Proposal Narrative.  Do not delete the section headings that are not highlighted. 

4. The NOFA strongly encourages the electronic submission of proposals in one of the following formats: Microsoft Word, WordPerfect, Rich Text Format (RTF), or Portable Document Format (PDF).  If proposals are electronically submitted, the three required forms listed below (5-b) need to be signed and mailed or faxed to the same office as the proposal was electronically submitted.  If the proposal is not electronically submitted, the three forms should follow the title page.  Complete paper submissions need to be delivered by 4:00 p.m. on October 20, 2003 with one original and two copies of the proposal including all required forms.  Applications received after October 20, 2003 will not be accepted. 

5. The following will instruct you about filling out each section.
   1. Title Page:  Complete the information requested.
   2. Three Forms (SF-424, SF-424A, SF-424B) must be included with the application. These three forms can be downloaded from this website: http://www.rurdev.usda.gov/rbs/coops/application.html
   3. Table of Contents:  Immediately following the three Forms.  Include page numbers for each component of the proposal.  Begin numbering after the Table of Contents. To update the Table of Contents, move your cursor to the page with Table of Contents, right click and select “Update Field” and “Update Entire Table”.
   4. Proposal Summary:  Limited to one page.  Add:  Title of the Project, Description of the Project, Names of the Individuals Responsible, and Expected Timeframe for Completing the Tasks.
   5. Eligibility:  Limited to two pages.    This section must include a description of:

                                                               i.      How you meet the USDA definition of the group applying for the grant (Are you an independent producer and do you meet the USDA definition for an independent producer?),

                                                             ii.      A list of all organizations involved with your project,

                                                            iii.      The group of independent producers if you are an Agricultural Producer Group.

                                                           iv.      The percentage of venture that will be owned and controlled by independent producers, and the value-added product to be produced.

                                                             v.      Discuss the value-added product to be produced from the value-added definition in the NOFA.  (Make sure you read the NOFA so you know if you meet the USDA definition for your group.)

Value-Added Definition:

1.                  Any agricultural commodity or product that has undergone a change in the physical state or form of the product (such as milling wheat into flour).

2.                  The production of an agricultural commodity or product in a manner that enhances its value, as demonstrated through a business plan (such as organically produced products).

3.                  The physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product (such as an identity preserved marketing system). 

4.                  Value-added also includes using any agricultural product or commodity to produce renewable energy on a farm or ranch.

The four types of value-added listed above have the potential for producers to receive a greater portion of revenue derived from the marketing, processing, or physical segregation of commodities or products.

6. Proposal Narrative:  The proposal narrative is the section where you describe your project.  (Not to exceed 35 pages.  Font must be Times New Roman 12 pt.) Items to be included are project title, information sheet, goals of project, evaluation criteria.  Each item is listed below with descriptions of what to put in each section.

                                                               i.      Project Title:  Keep it brief and to the point – not to exceed 75 characters.  The project title can go on the information page. 

                                                             ii.      Information Sheet for Evaluation Criteria: This is a sheet to help the reviewers find the information that is required to be in the grant.  You will write about each of these criteria in the section Evaluation Criteria. This is a one-page listing of the evaluation criteria and all relevant material and documentation contained in the proposal, which addresses or supports that criteria followed by the page number.  Do not include any other information on this page.  To update the page numbers, you need to right click on each number and select “Update Field”.

                                                            iii.      Goals of the Project:  Clearly state what the ultimate goal of the project is.  Describe the value-added venture to be developed.

                                                           iv.      Evaluation Criteria:  Each evaluation criteria must be addressed specifically.  Financial statements used to support evaluation criteria can appear in an Appendix and do not count as part of the 35 page limit. 

Business Viability

Describe in detail the technical and economic feasibility of the venture.  Include the organizational structure and operational aspects.  How will the venture operate efficiently and be sustainable?  More points will be awarded to proposals demonstrating the venture will be efficient and sustainable.  Provide market information to date.  Show why new resources are needed to meet market growth. 

Customer Base/Increased Returns

Describe the growth in a market or customer base for the product being produced because of the value-added venture.  Provide documented estimates of this expansion.  Describe how a greater portion of the revenue derived from the venture will be returned to the producers that are owners of the venture

YOU MUST INCLUDE: 

Three years of pro forma financial statements will all assumptions included (such as input prices, finished product prices, and other economic factors used in generating your statements).  Cash flow statements, income statements, and balance sheets all need to be included.  Income statements and cash flow statements must be monthly for the first year than annual for the next 2 years.  The balance sheet should be annual for all three years.  The financial statements are to be included in the Appendix and do not count toward the 35 page limit.  More points will be awarded to those proposals that demonstrate the greatest expansion of the customer base and increased returns to the producers.

Commitment

Describe in detail producer commitment including the number of producers who are currently involved as well as how many may potentially be involved, and the nature, level and quality of their contributions (Ex. Financial resources invested in the venture; and any contracts used between the producer that are owners and the venture.  Level of production committed by producers.)  Discuss the amount of funds raised from the independent producer that are owners and the use of those funds.  Also describe who will purchase the output of the venture (ie; end users); the amount of output to be purchased; markets that have been identified and any completed marketing studies; and any letters of intent or contracts from the potential end-users.  Do not submit specific contracts, letters of intent, or other supporting documents in the application.  However, do cite their existence in this section.  Describe the commitment from local and state development organizations, commodity associations, and local political institutions including technical assistance support and financial support.   Points will be awarded based on the greatest level of documented commitment.

Management Team/Work Force

Describe in detail the qualifications of the individual who will manage and operate the venture.  Discuss the education and experience of the management team, especially their experience in managing similar ventures.  Describe in detail the availability and quality of the labor force needed to operate the value-added venture.  Points will be awarded based on the greatest demonstrated level of relevant skills and experience, as well as those that reflect successful tract records in managing similar projects.

Work Plan/Budget

Prepare a budget narrative that specifically discusses how you plan to use the grant money and the match money. List each specific task you will work on, the amount of time to complete the task, and the order the task will be completed in (see example below).  The budget will need to detail the estimated costs associated with the project and the specific dollar amount should be allocated to each task.  Both matching and grant funds must be accounted for.  Remember that matching funds must also meet eligible grant uses.  Logical, realistic, and economically efficient plans and budgets will receive higher scores. 

Example:

Note: When you complete filling in all the budget items (federal and matching), place your cursor on the Total Cost of Project line in each column and right click to update the total amount.  You should do this every time you change something in the budget table.

Amount Requested

State the amount that you are requesting. Remember you will receive extra points for smaller grants (see NOFA).

Project Cost per Producer that are Owners

Divide the Federal requested funds by the total number of producers that are owners of the venture.  Points are based on the largest number of producers that are owners benefited for the least cost.

Biomass production

Extra points will be given for biomass proposals.

Delete if your proposal is not about Biomass production.

v. Verification of Matching Funds.  If you are committing cash as matching funds then you must include a copy of a bank statement or a copy of the confirmed funding commitment from the funding source.  Certify that matching funds will be available at the same time grant funds are anticipated to be spent and that matching funds will be spent at the same rate as grant funds throughout the duration of the project.  For in-kind matches, state and verify these commitments and show how they are valued.  Both cash and in-kind matching funds must be included on the SF-424 application forms.

Some of the sources of matching funds are:

            Cash match including cash on hand, loans, non-federal grants

            In-Kind from third party contribution:

Donation of office space or meeting rooms

            Donation of person time working on project (non-cash transaction)

                                    Value of hours of non-federally funded personnel assisting with project

Include a letter from In-Kind service providers, which document their contribution toward the project.  If the cash match is from a loan, include a letter from the lender stating you have been approved for a loan.

 Tips for Increasing Application Success

·        Answer all questions and follow the order suggested in the grant announcement

·        Use clear, direct language that can be understood by reviewers.

·        Explain the history of the project as it relates to related industries

·        How is this project unique and important?

·        Give the proposal energy throughout the application

·        Use active words to describe the proposal

·        Address and answer potential preconceived conceptions

 Proposals should convey the long-term economic viability of the project.  Show how the project has a plan to continue beyond grant funding and producer investment.  Support letters from stakeholders, opinion leaders and decision makers show the proposal has thought about a road map to success.

If you have questions, please contact the K-State VABDP at the contacts listed on the first page of the instructions.