Mr. John Trethowan:

We do not engage in strong-arm tactics. Senator Quinn asked an excellent question about cash flow. The SME sector is a very broad church. It includes microbusinesses, small companies and medium-sized businesses. It can include quite large businesses at times. In general, we get good cash flow information from SMEs that have finance directors. At the level beneath that, which might involve a sole trader or a partnership of people who are trying to act as finance directors while running the business, it becomes much more problematic. In the same way that accounts are normally produced for the tax man or for the purposes of a tax clearance certificate, some SMEs feel that cash flow forecasts are produced for banks in order to get loans. They do not use them for information management purposes, or to make sure they know where their business is going. That is part of the reason the Department of Finance is holding seminars throughout the country. It is trying to increase the ability of those involved in SMEs to run their businesses as well as possible. If one provides cash flow information without knowing where one's business will be in six or 12 months, how can the bank know where one's business will be? It is entirely legitimate to request a business to run a cash flow analysis.

The Senator asked why loan applications are declined. I think that matter will have to be addressed. The code of practice for SME lending is being reviewed. I think the reasons for declines will have to be made much more explicit when banks sends letters to potential borrowers. They claim they always phone people to tell them why their loan applications have been declined. The letter the customer receives in writing is generally generic in nature and does not set out the specific reasons he or she was declined a loan. In the cases of the appeals we see, we find out what issue the bank was having with the customer. When we tell the customer this is why the bank did not sanction the loan, it is usually the first he or she has heard of it. I think an improvement can be made in that regard if it is needed.

The Senator also asked about guarantors. It is made clear in the model I have provided that the banks will always look for some sort of security. They like to see tangible security. In the case of a limited company, the first thing the banks will do as a guarantee is try to tie in the personal liability of the promoter. They will not just take any kind of guarantees from a third party. I could provide a guarantee for €1 million today, but I would not be good for it. They are looking for some sort of tangible collateral that underpins the guarantee and will give them comfort if the loan goes bad. Can the Senator remind me of his final question?