Rural Payments and Services

Farmers and crofters who are waiting for their 2017 payment under the Less Favoured Areas Support Scheme (LFASS) will be offered a Scottish Government funded loan.

Rural Economy Secretary Fergus Ewing confirmed this will provide up to £55 million support to businesses operating in Scotland's most marginalised and remote areas.

Further details of this loan scheme can be found below.

Q. Why is there need for a loan scheme?

A. In advance of your LFASS 2017 claim being processed, the Scottish Government wants to ensure that you have funding available to support your business and to give you some financial certainty during the process

Q. Why are you calling it a loan when it's an advance on what I am due?

A. There are specific EU rules around advance payments which limit CAP-funded early payments by amount and timing.Therefore, we are making the offer of loans from domestic funding which is not constrained by EU rules. These are more generous and can be timed to suit Scotland’s farming businesses’ needs.

Q. Other businesses I have spoken to have received a loan offer letter but I have not. Does this mean I will not be offered a loan?

A. We will be sending out NLFASS offer letters in batches, the first offers will start to be sent from the end of February 2018 and will continue to be issued as claim eligibility is confirmed. If you are concerned about not receiving your offer letter please contact your local RPID Area Office or by emailing nationalLFASSScheme@gov.scot.

Q. What happens if I miss the application deadline?

A. You will still be able to enter the loan scheme, however we cannot guarantee when this payment will be processed. To avoid this, you should respond as soon as possible.

Q. What if I didn’t receive a letter?

A. Letters will be sent from the end of February 2018 and will continue to be issued as claim eligibility is confirmed. We will write separately to any applicants who we believe are not eligible for an LFASS 2017 payment to explain why this is the case. If you are concerned about not receiving your offer letter please contact your local RPID Area Office or by emailing nationalLFASSScheme@gov.scot .

Q. What if I don’t want a loan?

A. If you do not wish to accept the offer you do not need to take any action.

Q. What happens if I change my mind?

A. Please contact us as soon as possible by contacting your local RPID Area Office or emailing nationalLFASSScheme@gov.scot

Q. Where can I get help and support?

A. Customers can contact their local RPID Area Office or email nationalLFASSScheme@gov.scot

Q. I use an agent to manage my applications for funding – will they be able to accept my loan offer on my behalf?

A. The loan offer is being made to the business, in the majority of cases it will be a member of the business who signs and accepts the conditions of the loan.If a business member is not able to sign the opt-in form, then it can be signed by someone who holds the required authority from the business member(s) and accepts the responsibility for receiving the loan.The existing mandates held by RPID do not extend to loan payments.

Q. When will farmers and crofters see more detail on the scheme and when will they be able to apply?

A. We intend writing to those covered by the LFASS scheme later this month. In line with the approach taken to the BPS 2017 loan scheme, the LFASS 2017 scheme will be an “opt in” scheme. This means that those wishing to apply for a loan will need to reply promptly once the Government has written to them, indicating that they wish to apply. Clear guidance will be provided to support those wishing to apply for a loan.

Q. When will farmers and crofters receive their loan payments?

A. We expect to start to make loan payments in April to those who apply before the deadline included in their letter.

Q. How much will farmers and crofters receive?

A. We will take a similar approach to the LFASS 2016 scheme. This means that many businesses will be offered a loan of 90 per cent of their anticipated 2017 LFASS payment. Others will be offered less on a sliding scale, based on similar factors to those used in the 2015 and 2016 schemes, such as the extent of change in their land since 2015.

Q. How many farmers and crofters are eligible?

A. The full extent of eligible businesses is still being confirmed, but we expect this to be remain at around the same level as the 2016 loan scheme when offers were made to approximately 11,275 businesses.

Q. Will anyone not be eligible for a loan?

A. It is likely that a small number of applicants will not be in a position to be offered a loan. This was the case for the 2016 LFASS loan scheme too.

Q. How will loan values be calculated?

A. As for the 2016 LFASS loan scheme, this will be calculated on the basis of claimants' previous year's payment and changes in the amount of land for which they have claimed for 2017.

Q. What about those who have not had their LFASS 2016 payments verified, processed and paid?

A. We are reviewing the detailed data held about claimants in this position to ‎establish an appropriate and robust means for calculating what loans may be offered. We hope there will be limited impact for most claimants in terms of the value of loans offered.

Q. How will loans be repaid?

A. The value of loans will be deducted from the claimant's 2017 LFASS payment once that has been made.‎ This is the approach taken to the LFASS 2016 scheme and the BPS loan schemes

.Q. Will you charge interest?

A. Where loans are fully recovered, Scottish Government will meet interest costs in compliance with state aid rules. Further information will be provided in the loan offer letter.

Q. What is State Aid?

A. State Aid refers to the use national resources to support and incentivise businesses. There are many different State Aid regulations. The regulation which applies in this instance is 1408/2013 which is the Agricultural de-minimis Regulation.

Q. What is Agricultural deminimis?

A. Agricultural deminimis allows farmers to receive €15,000 over a three-year fiscal rolling period. For the National Loan Schemes it is the interest foregone (calculated at market rates) and not the actual loan amount that is the State aid element.

Q. How do the State Aid rules affect me?

A. By accepting the funding, you are declaring that you have not exceeded the deminimis threshold. Failure to do so could result in the funding being recovered with interest by the European Commission.

Q. How do I know the amount of State Aid benefit I have had from the various CAP loan schemes?

We sent you a letter in September 2017 detailing the amount of state aid benefit you have had in the form of interest from the various loan schemes in the past three years. If you require a copy of this letter please contact your local RPID Area Office or email nationalLFASSScheme@gov.scot.

Q. What schemes are covered by Agricultural deminimis?

A. Some examples of schemes which come under deminimis rules are:

• Bull Hire Scheme Sea Eagle Scheme
• Rural Priorities Outcome Plan AECS Farm Environmental Assessment Payment
• New Entrants and Others 2013 Weather Aid Scheme 2013
• BVD Check Payments Fallen Stock Fund
• Fox Control Scheme Biofuels Programme
• Resource Efficient Scotland Clyde and Avon Valley Tree Planting Scheme
• Dairy Farmer Island Concession Scheme Weather Impact Support Scheme for Westray Farmers
• Cash Flow Loan Scheme National LFASS Scheme 2015
• National LFASS Scheme 2016 National BPS Scheme 2015
• National BPS Scheme 2016 National BPS Scheme 2017

This list is not exhaustive and other schemes may also be subject to deminimis.

Q. What if a loan turns out to be more than the value of the claimant's eventual LFASS 2017 payment?

A. We have designed this scheme so that your LFASS payment should be more than or equal to the NLFASS paid to you. We will deduct the NLFASS payment and pay the remainder of your LFASS payment to your bank account.

The deduction will constitute a repayment of the NLFASS.However, if your LFASS 2017 total is less than the NLFASS you have been paid then you will have to repay the difference between the two amounts.

If you repay the balance within seven days, no interest will be charged. Interest at 3.93 per cent per annum on the difference will be charged from seven days after your LFASS payment is made.

Q. Will you allow for more time if a loan repayment can’t be made within seven days?

A. State Aid regulations require us to charge interest on any outstanding balance. However it is very unlikely that this will be an issue for you as the maximum payment you can receive as a loan through NLFASS is 90 per cent of your LFASS payment, we will automatically deduct the NLFASS payment from your LFASS payment.

Q. When will LFASS 2017 payments be made?

A. We are making good progress in our handling of LFASS2017 scheme payments, and are on track to commence payments earlier than we have done in previous years.

But as we cannot guarantee that payments will begin and be completed by our public commitment [date] we are launching the loan scheme to ensure farmers get their money without having to wait.

Q. I have been inspected – am I included in this?

A. Yes, so long as you are eligible for an LFASS 2017 payment.