Less Favoured Area loan scheme confirmed

Up to £57 million will be injected into some of Scotland’s most remote and rural communities, Rural Economy Secretary Fergus Ewing has confirmed.

Hill farmers and crofters will be offered a nationally-funded loan of up to 90% of their Less Favoured Area Support Scheme (LFASS) 2018 entitlement, with payments beginning in April.

Announcing the scheme ahead of the annual National Farmers Union Scotland AGM, he said:“I am acutely aware of the continuing importance of LFASS for farmers and crofters operating in the most remote and marginalised areas, which is why I am making these loans available.

“We are due to leave the EU at the end of March and the risk of leaving with no deal in place is growing.

All the analysis suggests this would be catastrophic for Scotland’s rural economy, and particularly challenging for livestock farmers, many of whom are farming in less favourable areas.

I am therefore determined to provide as much financial support and stability as I can so all eligible farmers and crofters will be offered a loan of up to 90% of their 2018 entitlement, with payments beginning in April.

“More widely, I am working tirelessly on finding a solution to continue to deliver funding under LFASS at approximately 100% for this year and the next two scheme years within the context of changes to EU regulations and budgetary constraints.

“My priority remains to protect and grow our rural economy and I encourage all eligible farmers and crofters to strongly consider taking up the loan offer.”

Background

  • There are specific EU rules around advance payments which at this stage of processing claims from 2018 would mean we could not make advance payments. Therefore, we are making the offer of loans from domestic funding that is not constrained by EU rules
  • The scheme has been designed so the payments under NLFASSS18 is less than the amount due from their LFASS payment. The sum will be automatically deducted from their LFASS payment when it is fully processed and they should receive a balance payment. Where loans are fully recovered, Scottish Government will meet interest costs in compliance with state aid rules
  • We will be sending out NLFASS offer letters in batches, the first offers will start to be sent from 1 March and will continue to be issued as claim eligibility is confirmed
  • The full extent of eligible businesses is still being confirmed, but we expect this to be remain at around the same level as the 2017 loan scheme when offers were made to just under 11,000 farmers and crofters. It is likely a small number of applicants will not be in a position to be offered a loan. This was the case for the 2017 LFASS loan scheme too

Last updated: 6 February, 2019