We questioned the Department about its assessment of the profile for default on loans and what plan it and ACE had to tackle organisations defaulting on their loans. The Department told us that it had developed a profile of default. It said it would take a prudent approach to valuation of the loan book over time and would be including loans in the Department’s accounts as part of its 2020–21 spending.20 We heard good explanations from ACE and Sir Damon of what they considered were the safeguards against the risk of organisations defaulting on their loans, for example extensive due diligence on the financial projections of each organisation and ongoing monitoring of their financial situation.21 Sir Damon was confident that successful applicants for loans had enough flexibility in their financial forecasts to repay the financing.22 ACE also believed it had mechanisms to alert it to risks materialising. ACE insisted that it expected organisations to pay back loans over the period of the funding agreement and that the loans would not be translated into grants.23