Part 7

Community investment tax relief
Chapter 3

Qualifying investments

Conditions to be met in relation to loans
345
1
Condition A of this section 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
Condition B 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 5 year period.
3
Condition C 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 5 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
Subsection (3) does not apply if the CDFI is required to make the repayment as a result of its failure to meet any obligation of the loan agreement which—
a
is imposed merely because 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 Part.
5
The Treasury may by order substitute any other percentage for any percentage for the time being specified in subsection (3).
6
Any such substitution is to have effect in relation to loans made by an individual on or after the date specified in the order.
Pt. 7 modified by 2005 c. 7, s. 54A (as inserted (10.7.2008) by The Alternative Finance Arrangements (Community Investment Tax Relief) Order 2008 (S.I. 2008/1821), arts. 1, 2)