European Rules and Regulations relevant to SBCI products
European Rules and Regulations relevant to SBCI products
The SBCI sources its funds from the Council of Europe Development Bank (CEB), the European Investment Bank (EIB), the Ireland Strategic Investment Fund (ISIF) and a Guarantee Notes Programme with the National Treasury Management Agency (NTMA). The Minister for Finance has provided a State guarantee in respect of borrowings received from the EIB. As a result of this State guarantee, SBCI products may contain an element of State aid and must comply with EU law governing State aid.
State aid can occur whenever State resources are used to provide assistance that gives certain entities, engaged in economic activity, an advantage over others by virtue of benefiting from those State resources. Generally, State aid is prohibited by the EC Treaty. However, State aid may be given legally by using approved EU schemes for State aid or by getting EC approval.
The European Commission has determined that State aid given to undertakings that comply with the De Minimis Regulations has a negligible impact on trade and competition. State aid that remains below a certain ceiling, depending on sector, and otherwise complies with the De Minimis Regulations (de minimis aid) is not subject to pre-clearance with the European Commission. The maximum amount of de minimis aid any single recipient can receive is €200,000 (gross grant equivalent) over a three-year fiscal period. The total amount of de minimis aid given to a single recipient performing road freight transport for hire or reward cannot exceed €100,000 over a three-year fiscal period. For loans, the amount of de minimis aid that is provided to a borrower (in the form of a discounted interest rate) is calculated into its “gross grant equivalent” (based on the discount prevailing at the time the aid is granted)1. The de minimis aid is not equal to the total amount of the loan. Applicants for SBCI de minimis loans must be aware that such loans are provided to applicants subject to compliance with the De Minimis Regulations.
De minimis aid is cumulative. To ensure the relevant ceilings are not exceeded and the cumulative rules are complied with, an SME application must provide a declaration about other de minimis aid covered by the Regulation or by other De Minimis Regulations received during the fiscal/calendar year concerned and the previous two years. It should be noted that a false declaration by an SME, resulting in the de minimis threshold being exceeded, could later give rise to the aid being recovered with interest. De minimis aid can be in the form of a grant, equity investment, guarantee or interest rate discount on a loan. De minimis aid could have been received from any State agency, department or local authority.
1The rate used is as specified in the Communication from the Commission on the revision of the method for setting the reference and discount rates (O) C 14, 19.1.2008, p. 6)
Examples of sources of de minimis State aid
The SBCI investment and working capital loans and refinance of exiting banks loan will be offered under the de minimis aid exemption contained in the regulation. In the event that de minimis aid is granted under this SBCI financing arrangement, the SBCI will confirm directly to the applicant the gross grant equivalent after drawdown of the funds.
The SBCI provides its products through its on-lending partners.
Please note the following activities are excluded from SBCI loans offered under the de minimis exemption:
Please refer to Commission Regulation (EU) No 1407 2013 for comprehensive details on specific exclusions.
The Agriculture Investment Loans supported by the SBCI are subject to the provisions of the Agriculture Investment Loan Scheme 2015. This scheme has been published by the SBCI in conjunction with the Department of Agriculture under Commission Regulation (EU) no. 702/2014 of 25 June 2014, which declares that certain categories of aid in the agricultural sector are compatible with the internal market and permissible under this EU Regulation by means of a block exemption. The Agriculture Investment Loan Scheme operates within the State aid rules by virtue of this block exemption.
Full details of the Regulation can be found at Commission Regulation (EU) No 702/2014.
The SBCI provides its products through its on-lending partners.
The objective of this scheme is to provide investment aid in the form of discounted loans and credit facilities to SMEs involved in the agricultural sector. Funding for the scheme will be provided by the Strategic Banking Corporation of Ireland (“SBCI”) through third party banks and credit institutions (“on-lenders”).
The operation of this scheme is subject to the provisions of Commission Regulation (EU) No 702/2014 of 25 June 20141 and in particular Chapter III, Section 1 (Articles 14 and 17) (the “Regulation”) and the enabling legislation of the Strategic Banking Corporation of Ireland (“SBCI”) the Strategic Corporation of Ireland Act 2014, as may be amended from time to time). Unless otherwise stated, terms defined in the Regulation shall have the same meaning in this scheme.
1 Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union.
The average annual budget of this scheme shall not exceed €150 million.
Loan applicants must be micro, small and medium-sized enterprises (“SMEs”) as defined in in Commission Recommendation 2003/361/EC2.
Loan applicants must be active in the agricultural sector, namely primary agricultural production, the processing of agricultural products or the marketing of agricultural products.
Loan applicants will be eligible to apply for loans once the project concerned meets the criteria set out below. The right to apply does not impose any obligation on an on-lending institution to provide funding to an applicant.
2Commission Recommendation 2003/361/EC concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).
Loans may be advanced to support investments in tangible assets or intangible assets on agricultural holdings linked to primary agricultural production or in connection with the processing of agricultural products and the marketing of agricultural products.
Where the loan is to support investments in tangible assets or intangible assets on agricultural holdings linked to primary agricultural production, the investment should pursue at least one of the following objectives:
Investments shall be in conformity with EU legislation and with Irish law on environmental protection under the Protection of the Environment Act 2003. For investment requiring an environmental impact assessment under Directive 2011/92/EU the aid shall be subject to the condition that such assessment shall have been carried out and the development consent shall have been granted for the investment project concerned before the date of granting the individual aid.
This scheme shall not apply to the following:
Investments that are linked to the production on farm-level of biofuels or energy from renewable sources are permitted provided production is limited to the average annual consumption of fuel or energy of the farm. Investments in installations, the primary purpose of which is energy production from biomass, shall not be eligible unless a minimum percentage of heat energy is utilised. Investments in connection with the production of food-based biofuels are ineligible.
The maximum amounts of aid that may be generated through the form of discounted interest rates on loans supporting investment under the scheme are:
These limits shall not be circumvented by artificially splitting up an aid project.
Only transparent forms of aid (i.e. in which it is possible to calculate precisely the gross grant equivalent as a percentage of eligible expenditure ex ante without need to undertake a risk assessment) may be provided under this scheme.
This scheme shall apply only to aid which has an incentive effect.
Aid shall be considered to have an incentive effect if the beneficiary has submitted a written loan application for the aid to the SBCI or its on-lenders / agents before work on the project or activity starts. The loan application shall contain at least the following information:
If work begins before the applicant has submitted a written application to the relevant development agency the whole project will be ineligible for aid.
The aid shall cover the following eligible costs:
Costs, other than those referred to in paragraph (a) and (b), connected with leasing contracts, such as lessor’s margin, interest refinancing costs, overheads and insurance charges shall not be considered to be eligible costs.
Working capital shall not be considered to be an eligible cost. VAT shall not be considered an eligible cost (except where it is non-recoverable under Irish law).
The aid intensity or total aid resulting from the loan shall not exceed 40% of the amount of the eligible costs.
For the purposes of calculating aid intensity and eligible costs under this scheme, all figures used shall be taken before any deduction of tax or other charge. The eligible costs shall be supported by documentary evidence which shall be clear, specific and contemporary.
Aid provided in the form of a discounted loan shall be discounted to its value at the moment it is granted. The eligible costs shall be discounted to their value at the moment the aid is granted. The interest rate to be used for discounting purposes shall be the discount rate applicable at the moment the aid is granted.
Aid under this scheme shall not be cumulated with any de minimis aid in respect of the same eligible costs if such cumulation would result in an aid intensity exceeding those laid down in the Regulation.
The information referred to in Appendix 1 to this scheme will be published on the Strategic Banking Corporation of Ireland’s State aid website on each individual aid award where they exceed the following:
This scheme shall operate from 27 January 2015 until 31 December 2020.
Information shall be published in a spread sheet data format, which allows data to be searched, extracted and easily published on the Internet, such as CSV or XML format. Access to the State aid website shall be allowed to any interested party without restrictions. No prior user registration shall be required to access the State aid website.
The following information on individual aid award shall be published:
The borrower must comply with the following:
The Borrower must confirm to the bank that it satisfies one of the following conditions:
As at the date of the letter of sanction entered into by the customer in relation to the facility in question, it must accept that it satisfies the eligibility criteria for the scheme and that it undertakes that it shall at all times comply with those eligibility criteria.
The loan received by the customer is exclusively for working capital purposes.
Details to be Published
The Department of Agriculture, Food and the Marine and the SBCI will comply with the reporting requirements as set out in Commission Delegated Regulation (EU) 2016/1613 in respect of loans to livestock and dairy farmers, and with de minimis state aid reporting requirements in respect of loans to other farmers.
The rights of data subjects and how they may be exercised are laid down in the Data Protection Acts, 1988 and 2003. The Office of the Data Protection Commissioner publishes a guide to your rights as a data subject.
For further information about Data Protection, click here.
Publication of CAP Beneficiaries Data
In accordance with EU Regulation 1306/2013, the Department of Agriculture, Food and the Marine is obliged to ensure annual ex-post publication of all of the beneficiaries of CAP funding, both legal and non-legal persons.
Further information is available on the Department of Agriculture, Food and the Marine website: www.agriculture.gov.ie
The State aid amount for a loan is arrived at by selecting the term of the loan in years (horizontal blue axis) and the value of the loan in Euro (vertical yellow axis) in the State Aid Matrix below. Where the term and/or loan amount(s) falls between two values the higher figure(s) should be selected. This is illustrated in the following example of a loan of €41,000 for 4.5 years:
See the State Aid Matrix (indicative) for further details*.
Note: The State Aid Matrix provided is for indicative purposes only.