On-Farm AD Fund - FAQs

  1. Who can apply to the fund?
  2. Can farmers in Scotland and Wales apply for the fund?
  3. Does the fund cover AD plants that will be fed by energy crops?
  4. What size of AD plant is eligible for the fund?
  5. Can an AD developer/ operator leasing land from a farmer apply for funding?
  6. If I am awarded a grant will this affect my eligibility to claim FiTs, RHI, ROCs, or RTFO?

Stage 1 – Grants to develop business plans

  1. Why do you require a business plan for farm scale AD under the Loan Fund? 
  2. How much money is available to develop my business plan?
  3. What does the grant for the development of the business plan cover?
  4. What do you mean by a qualified person?
  5. Is there a preferred list of consultants to carry out the business development plans?
  6. How do I apply for the business development grant?
  7. When will I hear from WRAP once the application form is submitted?
  8. If my application is successful, when will I receive payment of the grant?
  9. What will WRAP do with my completed business plan?

Stage 2 – Capital loans

  1. Do I need to have been awarded an On-farm business development grant before I can apply for the loan?
  2. What does the loan cover?
  3. How much capital is available through the loan?
  4. What is the interest  charges for  the loan?
  5. Will there be an arrangement fee? 
  6. What are the repayment options?
  7. What security is required for the loan?
  8. What are the lending criteria for the loan?
  9. Will my eligibility to claim from incentive schemes  e.g. RHI, FiTs be affected if I am awarded a loan?
  10. How does the process of applying for a loan work?

1. Who can apply to the fund?

Only farm businesses in England can apply for the grant and loan.

One grant of £10,000 for the development of a business plan and a single loan of up to £400,000 (or maximum of 50% of the capital) is available per farm.(You may only apply for more than one grant or loan if the anticipated AD plants are located on different farms).

2. Can farmers in Scotland and Wales apply for the fund?

The fund is not available to farmers in Scotland and Wales, however the business plan documentation available online can be accessed by all farmers wishing to develop their own business case for AD on their farm. Information is available at www.wrap.org.uk/onfarm in the business plan guidance document relating to the different regulatory and planning requirements of the different nations. 
 

3. Does the fund cover AD plants that will be fed by energy crops?

This fund is only available to farmers who will be feeding the plant predominantly with farms wastes including manures and slurries. The fund will not be available to farms where energy crops will be the main feedstock.
The fund is to help improve resource efficiencies for farmers who have access to farm wastes. Digesting farm waste is the most effective and efficient way to convert these wastes into valuable fertilizers and renewable energy. Additional benefits include better management of manures and slurries, improved environmental controls, reduced greenhouse gas emissions and improved energy security.  
 

4. What size of AD plant is eligible for the fund?

Funding is available to farmers wishing to build an AD plant with a maximum energy output of 250 kilowatts.
 

5. Can an AD developer/ operator leasing land from a farmer apply for funding?

No.  Only a farm business can apply for funding.

6. If I am awarded a grant will this affect my eligibility to claim FiTs, RHI, ROCs, or RTFO? 

The grant available under this fund will cover the cost of developing a business plan and not the capital expenditure costs of building the plant.  Therefore if you are awarded the grant, it will not affect your eligibility to claim FiTs; RHI; ROCs; or RTFO. 
The £10,000 grant available under the On-farm AD funding programme falls under the remit of State Aid under the De minimis regulation (Regulation 1998/2006). This allows an enterprise to receive up to €200,000 (cash grant equivalent) over a 3-year fiscal period.  The sterling equivalent is calculated using the Commission exchange rate applicable on the written date of offer of the De minimis funding. To establish whether you are eligible to receive de minimis aid, we require that all de minimis aid is declared when you complete the application form. 
If you are awarded a grant then you must declare this De minimis award if you apply for any other type of state aid support in the future.  E.g. if you apply for FiTs, ROCs, RTFO, or RHI the tariff will be calculated so that the cumulative value of the support received does not exceed the €200,000 threshold.  
 

Stage 1 – Grants to develop business plans

1. Why do you require a business plan for farm scale AD under the Loan Fund? 

A business plan will help farmers decide whether AD is the right option for them and if so it can then be used to secure funding for their project. It will help WRAP make an informed decision about the offer of a loan.  
 

2. How much money is available to develop my business plan? 

Up to £10,000 is available to each farm to develop an initial scoping and develop a business plan. If the cost of developing a business plan exceeds this amount, you will need to find other funds to cover this.
 

3. What does the grant for the development of the business plan cover?
 

Consultancy fees relating to the business plan development. This could also include activities such as determining what planning consents and permits are required.  However the grant does not cover the cost of obtaining any necessary planning permissions or environmental permits.
 

4. What do you mean by a qualified person?

You will need to demonstrate that the person you have chosen to deliver the work has the relevant AD and financial experience to carry out the business plan.  We will require a copy of their CV and details on any similar work they have carried out previously. We will look for: 

1. A demonstrable track record of experience and/ or qualifications in the relevant field. This may be demonstrated by their professional accreditation, CV, case studies, testimonials etc. 

2. Professional indemnity insurance of over £1m to cover your business for the investment of time and money you will be making on the basis of their advice.

3. We will need to know whether your selected consultant has any personal or business relationships, for example with or is themselves a technology supplier, which might influence their advice. 

4. Assurance that your selected consultant has appropriate financial experience to put together the required financial plans required for the project.

5. Is there a preferred list of consultants to carry out the business development plans?

No. It will be up to the farmer to find an appropriately qualified consultant/agent to deliver the work. As part of the grant application you need to demonstrate that your chosen consultant delivers value for money. You therefore need to get a minimum of three quotes. Organisations such as the NFU and ADBA can provide a list of consultants.

6. How do I apply for the business development grant

Register online at www.wrap.org.uk/onfarm to access and download the application form and supporting guidance document.  Complete the application form and send it to onfarm@wrap.org.uk. WRAP will review your application which may mean we will contact you to discuss your proposed project further.

7. When will I hear from WRAP once the application form is submitted?

WRAP will review applications for grants on a rolling basis.  We may need to contact you to help us fully understand your application. Otherwise your application will go forward to the next review meeting.  Review meetings are held at the end of every month. All applications that are received by the 15th of the month will be assessed at the end of that month. Applications received after the 15th will be assessed at the end of the following month. This may change, due to the volume of submissions received, in which case we will inform you on receipt of your application. 

WRAP will aim to contact you within 10 working days of the review meeting with a decision.

 

8. If my application is successful, when will I receive payment of the grant?

Developing the business develop plan comprises of two stages.  The first stage is an initial high level scoping study to determine whether or not an AD plant is an appropriate addition to the farm business.  The second stage is the development of the business case using the business plan template and will only proceed if the outcome of the initial scoping study recommends the build of an AD plant of less than 250kW energy output fed predominantly on farm wastes.  

The two payments of the grant therefore correspond to the completion of two stages described above. The first payment will be made once the scoping study report is completed and the second payment will be made once the business plan is completed. Both documents will need to be sufficiently detailed and received by WRAP along with proof of payment which is usually evidenced with a bank statement to the consultant who has delivered the work. Payment will be made to your account via BACs.

9.What will WRAP do with my completed business plan?

WRAP will treat the information in your business plan as confidential. If your business case highlights good practice from which other farm businesses could benefit we may publish a case study. The content of any case studies will be discussed with you before it is published. It will not contain any commercially sensitive information.

Stage 2 – Capital Loans

1. Do I need to have been awarded an On-farm business development grant before I can apply for the loan?

No.  You do not need to have been awarded a business development grant, however we recommend that you refer to the business development plan template available on the WRAP website to ensure that your business plan includes all the required information needed by WRAP to assess your loan application.

2.What does the loan cover?

The loan covers the capital expenditure for the AD development and costs associated with planning, permits and consultancy fees (unless already covered through the grant).  It does not pay for the ongoing operational costs of the plant.

3.How much capital is available through the loan?

A maximum of £400,000 or up to 50% of the allowable capital cost of the AD build.

The farmer will need to match loan funding with finance from other sources.

4.What is the interest  charges for  the loan?

Interest is charged at UK Reference Rate plus a margin based on the level of risk taken by WRAP. (http://ec.europa.eu/competition/state_aid/legislation/reference_rates.html)   

The interest margin is likely to be in the rate of 3 – 12 % depending on the risk and the individual details of your project.  A number of factors will be considered when assessing the risk including the nature of the project being undertaken.

5. Will there be an arrangement fee?

An arrangement fee will be charged on each loan and this will be payable prior to the release of funds. In some circumstances, this fee can be added to the loan, however this will attract interest along with the principal. Security fee – the legal fee incurred to register the security associated with the loan will be payable prior to the release of funds. Valuation fee – the fee incurred to value to asset(s) will be payable on draw down.

6.What are the repayment options?

If you satisfy our eligibility criteria and are able to demonstrate that your business can service the debt during the term of the loan, we will work with you to agree a suitable repayment arrangement based on the overall farm business. Both the principal and interest can be paid monthly; quarterly; half-annually or annually. In addition, it may be possible to defer payments for a period of up to 12 months during the term of the loan. Such payment holidays will be agreed in advance of the release of funds.

7.What security is required for the loan?

WRAP prefers to take priority charge over the assets being funded or other suitable assets, however, if it is not possible to grant a priority charge, or the assets are of insufficient value, we may consider alternative security. Assets must be insured for a minimum reinstatement value as advised by our valuer.

8.What are the lending criteria for the loan?

The farmer must have the ability to repay the loan, including interest and fees over the agreed term.

  • P&L accounts for the last 3 years of trading are required where available.
  • Cash flow projections and business plans are required.
  • A credit check will be undertaken on the borrowing entity.
  • Quality and value of the underlying asset(s).

The business must be able to demonstrate that they have applied for commercial funding, which has either been declined or offered on terms which questions the overall viability of the investment project. (Full details of the information required to assess creditworthiness are in the application pack issued on completion of the Eligibility Checklist.)

9.Will my eligibility to claim from incentive schemes e.g. RHI, FiTs be affected if I am awarded a loan?

The loan will be made available on a commercial basis and therefore it is not recognised as State Aid. Receipt of the loan does not conflict with incentives schemes.

10.How does the process of applying for a loan work?

WRAP has a finite loan pool and selects projects for funding through a competitive process, with those applications most strongly meeting our criteria being granted a loan. 

1) Complete the initial eligibility checklist at www.wrap.org.uk/onfarm

2) If you meet the eligibility criteria a member of the WRAP team will contact you to discuss your project in more detail.

3) Following your discussion with WRAP a loan application form will be sent to you.

4) Complete the application form and submit to WRAP. 

5) WRAP will review you application and if approved you will be sent an offer proposal which is subject to due diligence.  

6) If no issues arise from the due diligence then terms can be finalised and the loan drawn down.

 

On-Farm AD