National Less Favoured Area Support Scheme 2018 (NLFASS 18)

Date published: 12 February, 2019

Q. Why is there need for a loan scheme?

A. With the ongoing uncertainties around Brexit and the real possibility of a 'No Deal' which would effectively cut all ties with the EU and bring real challenges to the rural economy, we are offering eligible farmers and crofters a loan of up to 90% of their 2018 entitlement, with payments beginning in April.

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. When will farmers and crofters receive their NLFASS18 loan offer letter?

A. We will be sending out NLFASS offer letters in batches, the first offers will start to be sent from the 1 March 2019 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 email nationalLFASSScheme@gov.scot. We will write separately to any applicants who we believe are not eligible for an LFASS 2018 payment to explain why this is the case.

Q. What happens if I miss the application deadline?

A. You will still be able to enter the loan scheme, we will work to process your loan payment as quickly as possible but cannot guarantee when you might be paid. To avoid this, you should respond as soon as possible.

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. If you still have your offer letter then please return the opt in slip to us. If you require a copy of your loan offer letter then 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 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 will loan values be calculated?

A. We will take a similar approach to the LFASS 2017 scheme. This means that many businesses will be offered a loan of 90% of their anticipated 2018 LFASS payment. Others will be offered less on a sliding scale, based on similar factors to those used in the 2017 scheme, such as the extent of change in their land since 2017.

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 around the same level as the 2017 loan scheme.

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 2017 LFASS loan scheme too.

Q. How will loans be repaid?

A. The value of loans will be deducted from the claimant's 2018 LFASS payment once that has been made.‎ This is the approach taken to the LFASS 2017 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 de minimis?

A.Agricultural de minimis 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 de minimis 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?

A. We will include an estimate on the total amount of state aid you have received from the national loan schemes in your LFASS loan offer letter.

Q. What schemes are covered by Agricultural de minimis?

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

Bull Hire Scheme Sea Eagle Scheme
Rural Priorities Outcome PlanAECS Farm Environmental Assessment Payment
New Entrants and Others 2013Weather Aid Scheme 2013
BVD Check PaymentsFallen Stock Fund
Fox Control SchemeBiofuels Programme
Resource Efficient ScotlandClyde and Avon Valley Tree Planting Scheme
Dairy Farmer Island Concession SchemeWeather Impact Support Scheme for Westray Farmers
Cash FLow Loan SchemeNational LFASS Scheme 2015
National LFASS Scheme 2016National BPS Scheme 2015
National BPS Scheme 2016National BPS Scheme 2017
National LFASS Scheme 2017National BPS Scheme 2018

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

Q. What if a loan turns out to be more than the value of the claimant's eventual LFASS 2018 payment?

A. We have designed this scheme so that your 2018 LFASS payment should be more 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 2018 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 4.29 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 7 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% of your LFASS payment, we will automatically deduct the NLFASS payment from your LFASS payment.

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

A. Yes, so long as you are eligible for an LFASS 2018 payment.

Q. When will LFASS 2018 payments be made?

A. We are making good progress in our handling of LFASS 2018 scheme payments, and are on track to commence payments in April 2019 earlier than we have done in previous years. However with the ongoing uncertainties of Brexit and the possibility of a “No Deal” we are launching the loan scheme in March to guarantee farmers and crofters get access to their money during uncertain times.

Q. What will happen to farm support payments after Brexit?

A. To put it simply, if there is a deal then the transition period would see current CAP rules continue to apply to the UK. If there is no deal, The EU Withdrawal Act roles over EU rules into domestic law; under both scenarios we will have a legal basis to allow continuation of payments. If the UK leaves the EU in March 2019 with no agreement in place, eligible farmers and crofters will continue to receive support payments under the terms of the UK government's funding guarantee.