State Aid & Covid-19 Support

One of the questions farmers have been asking the Farm Advisory Service when they are considering applying for the Business Bounce Bank Loan Scheme (BBLS) is how much state aid they’ve had. Here’s what you need to know.

The basic idea is that there are limits on the amount of support that can be given to businesses, it’s a measure intended to maintain a level playing field between different countries and avoid one country providing trade-distorting subsidies. For example the French government gave a large sum of money to Airbus, the USA claimed that this was unfair (it put Airbus at an advantage over Boeing), and because the WTO agreed, France is now being sanctioned.

Agricultural businesses are permitted to get up to €20,000 of state aid in a rolling 3 year period, though this has recently been increased to €100,000 because of the pandemic (and even to €120,000/125,000 in some circumstances). This is an area which may be subject to change in future however, since our state aid rules are EU in origin!

These are not state aid: agricultural subsidies, the capital sum of any Scottish Government loan schemes, or mainstream agricultural grant schemes like AECS, New Entrants grants, etc.

These are state aid: the interest element of any agricultural loan schemes, e.g. £20,000 BPS loan for 6 months will likely have <£500 state aid. Some one-off grants, for example the Weather Aid Scheme in 2018 was state aid though it paid out a relatively small amount so isn’t significant.

Coronavirus schemes vary. At the current time we understand that the interest element of the CBILS/BBLS is classed as State Aid, as is the Small Business Grant Fund (the £10k grant that most farmers weren’t eligible for, but might have been received by some diversified businesses).

The key thing to bear in mind is that the vast majority of normal farming businesses don’t receive enough state aid to be near the threshold, even including the support they’ve been able to access through coronavirus. You can check how much State Aid you’ve had from subsidy loan schemes if you check the back of the most recent BPS loan letter: it has details of the state aid received by the business in the previous 3 year period.