Banks must be helped to deliver during this crisis


Economic forecasters spend a lot of their time analysing the latest trends, trying to predict when the next big financial crisis will happen.

It’s fair to say that no one saw Covid-19 coming and as such, much of the UK government’s response has been hastily implemented.

In line with other countries across the globe, the UK government has unveiled a number of unprecedented fiscal stimulus measures. This holds true even if you compare the responses to our current predicament to the last major crash, the Global Financial Crisis.

However, this time around there is a crucial difference.

During the last downturn, the banking system was the epicentre of the crisis. As confidence drained from the market – particularly after Lehman Brothers collapsed- banks stopped lending to each other. Only mass government intervention managed to restore enough confidence to turn the liquidity taps back on, albeit at the cost of a low-interest-rate environment that we were only starting to emerge from prior to Covid-19.

However, today’s crisis is markedly different in the sense that banks themselves are still able to lend. Instead, a need to enforce home working for millions across the UK to slow the spread of Covid-19 means that this downturn is immediately impacting businesses. For example, retail is one sector where operating day to day is now impossible for bricks and mortars stores as they aren’t allowed to open. A ramification of this has been many withholding rent for the March quarter. That, in turn, is impacting commercial landlords by starving them of income and making them struggle to meet their own debt obligations.

This story is being repeated across multiple sectors and is impacting businesses of all shapes and sizes.

Clearly then there is a need to facilitate emergency loans so that businesses on the brink are able to bulk up their cash reserves during this crisis.

The UK government has taken the sensible step of setting up an emergency coronavirus business interruption loan scheme (CBILS).

Given their central role in the last crisis, banks are keen to be seen helping this scheme and lending.

But as it stands, the UK government’s CBILS scheme has had a number of challenges, and the lending criteria has been subject to change since the original announcement. As a result, it has taken banks some time to be sufficiently comfortable to lend at the scale necessary.

One clear tension is that banks are nervous about relaxing their existing lending criteria. After negative feedback, the government has removed the ability for lenders to demand any personal guarantees for loans below £250,000. Above that, banks cannot insist on a guarantee over the borrower’s main home.

Another issue for the banks is that they simply do not have the capacity, or the manpower needed to process nor properly assess CBILS loan applications quickly enough.

But there is a clear and pressing need to help the banks feel comfortable lending to businesses in difficulty. The British Chambers of Commerce has said that many firms are now running out cash and are standing at the cliff edge, with only 1% getting government funds according to a recent survey conducted by the organisation.

This is why Salamanca Group has decided to step in and set up an advisory process to smooth this process and help Britain’s economy weather the storm.

Since our founding in 2002, we have specialised in raising finance for businesses. During these unprecedented times, we are determined to offer our nearly two decades of experience and assess business applicants for CBILS for banks.

We will be able to quickly assess applicants and decide if they are viable. Not only will this help banks be able to consider loans faster, but it will also provide much-needed certainty for the applicants.

For those who may not meet the CBILS criteria, we will be able to offer advice about whether they can raise funds through non-bank lenders as well as advise on other types of financing structures that they may want to consider.

A good example of this is a revolving credit facility, which essentially acts like an overdraft. Given many businesses may for now only need £100,000 to keep going but in a few months may need an extra £200,000, the flexibility of these types of structures are well suited to the fluid crisis the UK – and the world- is experiencing.

Please find below more details about how we can help banks and businesses during this period or click here to download our flyer.

Martin Bellamy – Chairman, Salamanca Group


About our CBILS advisory

Salamanca Group, in partnership with Hines Associates, is working to swiftly stabilise your businesses and deliver real improvements to cash flow, liquidity and capital structure to find a sustainable outcome for your business.

We will guide you through every step of the process. Standing shoulder to shoulder with management to enable business, protect assets and maximise value for companies in stressed situations.

Our team will serve you from evaluating your likelihood of success in accessing CBILs funding through to negotiate loan terms (cost, security etc) using our market insight to make sure these are reasonable. Should you wish not to proceed with CBILS, we are well placed to suggest alternative strategies and/or sources of funds.

Please email our CBLIS Rapid Response team at where a member of our team will be in touch within one working day to arrange a call.