Scots offered bridging loan to ease Brexit and Covid effect

The Scottish government has launched a £340m loan scheme to help farm businesses cope with Brexit uncertainty and the continuing coronavirus pandemic.

The National Basic Payment Support Scheme loans are designed to maintain cashflow, according to Scotland’s rural economy secretary Fergus Ewing.

The scheme provides Scottish farmers access to 95% of their 2020 CAP support and greening payments, to a maximum of £133,638. 

A similar scheme in 2018 delivered payments worth more than a quarter of a billion pounds to more than 13,500 farmers after a period of bad weather.

The Scottish government urged farmers to look out for loan offer letters in the coming weeks.

These will be sent to eligible farmers and crofters from the beginning of August, with the first payments due in September, it said.

See also: Expert advice on tendering for a farm tenancy ahead of Brexit

Successful applicants will have access to vital financial support up to three months earlier than the EU CAP payment period.

As the end of the Brexit transition period approaches, farmers will be feeling additional anxiety, so it is essential they have the cashflow they need, Mr Ewing said.

He added that the Scottish government had considered using the EU Advanced Payment system to process CAP basic payments earlier than in previous years.

“[But] the Covid-19 outbreak made us reconsider whether this could deliver as much support as quickly as a loan scheme,” Mr Ewing said.

“We have decided to offer the loan scheme so that farmers can access this support at the earliest ever point,” he said. 

“I would encourage anyone who would like to accept their loan offer to do so by email where they can, to allow us to process these important payments as quickly as possible.”

NFU Scotland welcomed the government initiative, which would ease cashflow worries and allow farmers to invest in their businesses amid concerns over Covid-19 and Brexit.

Union president Andrew McCornick said knowing the loan scheme was coming would provide reassurance and help farmers talk to their banks about borrowings.

It also backed up the decision to stick to a 15 May deadline for BPS applications, McCornick said.

“The ability for the Scottish government to make what will effectively be advanced payments is testament to claimants sticking to the 15 May application deadline, despite the unprecedented circumstances this year.

“I would urge all to opt into this year’s scheme and to do so by email where possible to ensure payments are processed and made as soon as possible,” he said.