SCHEDULES
SCHEDULE 16Community investment tax relief
Part 3Qualifying investments
9Conditions to be satisfied in relation to loans
1
The first condition of this paragraph is that either—
a
the CDFI receives from the investor, on the investment date, the full amount of the loan, or
b
if the loan agreement authorises the CDFI to draw down amounts of the loan over a period of time, the end of that period is not later than 18 months after the investment date.
2
The second condition is that the loan must not carry any present or future right to be converted into or exchanged for a loan which is, or securities, shares, or other rights which are, redeemable within the five year period.
3
The third condition is that the loan must not have been made on terms that allow any person to require—
a
the repayment during the first two years of the five year period of any of the loan capital advanced in those two years,
b
the repayment during the third year of that period of more than 25% of the loan capital outstanding at the end of those two years,
c
the repayment before the end of the fourth year of that period of more than 50% of that loan capital, or
d
the repayment before the end of that period of more than 75% of that loan capital.
4
For the purposes of sub-paragraph (3), any requirement arising as a consequence of a failure of the CDFI to fulfil any obligation of the loan agreement shall be disregarded if that obligation—
a
is imposed by reason only of the commercial risks to which the investor is exposed as lender under that agreement, and
b
is no more likely to be breached than any obligation that might reasonably have been agreed in respect of the loan in the absence of this Schedule.
5
The Treasury may by order substitute for any percentage for the time being specified in sub-paragraph (3) such other percentage as they think fit; and any such substitution shall have effect in relation to loans made by a person on or after such date as may be specified in the order.