Mr. Declan Hughes:

Regarding quota, our approach is to ensure that we have the broadest range of participating lenders in the schemes. For example, we initially limited the pillar banks to nearly one third of the first tranche of the credit guarantee scheme. We then tried to get other finance providers, including the credit unions, to participate. We did that to ensure that not all of the funding was cornered or taken by the pillar banks and to increase competition. We have taken a similar approach to lender allocation in the future growth loan scheme. We have the flexibility to reallocate if finance is not being used or drawn down or if any sort of market playing is happening. Our intention is to help make the market increase participation, drive lending and drive down costs. The future growth loan scheme was the first product that brought in ten-year money at below 4%, which is what indigenous enterprises needed in terms of low margins. We are taking a similar approach to the new Brexit impact loan scheme. The next step is to go out and determine the level of interest from lenders in the market, how best to allocate and what quota might be applied.

The Deputy is right about development advice. One of the key lessons from the past year has been the importance of providing help to businesses in terms of business continuity and business sustainment planning and providing mentoring for them in advance of making applications for finance. Advice came to us strongly from the Credit Review Office about ensuring that the business plans answered the right questions and were sustainable before they were submitted to the bank. Enterprise Ireland provides a €5,000 financial planning grant, which has been helpful to businesses in mapping out their medium to long-term development. It has helped with the drawing down or preparation of applications to the sustaining enterprise fund, under which a current provision of €200 million is being administered. Similarly, more than 10,000 business continuity vouchers were issued by local enterprise offices, LEOs, by the end of last year. In the first couple of months, they were drawn down to help businesses prepare business sustainment plans so that they could access funding. Microfinance Ireland provides a reduction of 1% in the interest rate for businesses that come through LEOs. There is a standard rate of, I believe, just over 5%. It is reduced by 1% to 4% or 4.5% for a business that comes through an LEO. The business gets access to a mentor, professional advice and so on, which helps it to ensure it has a plan that is sustainable in the longer term.

Digital and climate are complex areas. With Enterprise Ireland and LEOs, the Tánaiste just launched a new €10 million green enterprise fund. It will help to provide advice and strategic planning capacity to micro and small businesses to prepare climate adjustment plans that include their investment needs and assessments of technology. Major uncertainties for businesses revolve around what the best technologies are, what is appropriate for their business, what markets are they going to and how they can finance that. Financial planning supports are available and we hope to support approximately 850 businesses with them this year. We are open to suggestions about how we might proceed with that.

Regarding loss expectations, it is capped. We are utilising the European Guarantee Fund, EGF, for 56%. Another 24% is the State's, but it is capped at €29 million. As with previous guarantees, there is a fair distribution between what the EGF and the State are providing, but also what the banks are providing, given that they will have skin in the game as well and will hence be judicious in their assessments.

Regarding attitudes towards borrowing, the key issue before Covid was that businesses were in deleveraging mode. We had seen a decrease in the refusal rates, but there was still a reluctance to borrow. During the early part of the crisis, there was a significant increase in facilities being opened or requested by businesses but not subsequently drawn down. For six months of last year - essentially from April or May to October or November - nearly 30,000 businesses had loan breaks with their banks. Most of those breaks have now been worked through and businesses are coming back. We are seeing more modest levels of borrowing in the credit guarantee scheme. These are more essential levels of borrowing. The average loan is approximately €50,000 to €60,000. Our initial budgeting expectation was that it would be similar to the future growth loan scheme at approximately €150,000 to €200,000, but the feedback we are getting is that businesses are taking out just enough to see them through until they get certainty about reopening. The facility will be available to them to come back to those lenders as they look to reopen. That is the research and feedback we are getting from the Central Bank. As the economy reopens, there will be a need for increased liquidity for working capital and investment finance to meet the expected increase in demand in the recovery. Perhaps Dr. Harvey or Ms Kilcullen wish to comment on the issue of demand.