Mr. Neil McDonnell:

In the base case, I have to be honest and say there is no debt appetite among many SMEs. Many of them are not applying for credit. When the revamped credit guarantee scheme was announced last year, there was a lot of interest in it. However, it should be borne in mind that the credit guarantee scheme has been on the go since 2012 and, historically, there has been an uptake rate of only 13%. That did not substantially change with the new scheme. Many members contacted me to tell me they had gone to the Strategic Banking Corporation of Ireland, SBCI, completed their application, got an application number, gone to the bank and then the process went into the dust. It seems to me that even with the State shouldering 80% of the risk, the banks did not view some of the SMEs as good risks.

I am aware that the Minister for Finance said, if the State gave a 100% guarantee, it would remove all moral hazard from borrowers. I do not accept that. We should not forget the debt is between the borrower and the lending institution. The State only steps in if the debt is not repaid. Only €250 million of the €2 billion available under the credit guarantee scheme has been lent to date. There is no desire to take up the scheme.

That is why I referred at the outset to the US scheme. I am not being naive. I know the system is sometimes prone to some level of abuse. However, when the abuse argument is raised, I make the point that robust anti-abuse measures should be put in place. We should not refuse to take a measure because it is potentially subject to abuse. Frankly, every law that is ever passed is going to be subject to some level of abuse. If we were to follow the American model, there would be debt finance and there could be forgiveness for some of the debt down the line. For example, the Legislature could take the view that if a business has maintained 100% or 90% of its workforce, a certain amount will be forgiven. That is the sort of thing we could look at doing to potentially make debt more attractive.