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Small Business Loan in Dubai


Dubai is a land of opportunities for entrepreneurs to start their business. Anyone who wishes to establish business outside of his home country, UAE is the first place that comes to his mind. According to world Banks’s Ease of Doing Business Report 2017, UAE stands on 21st position. This is because the government has developed an unparalleled infrastructure, rich and diverse culture and business environment which positively affected economy.

The commercial capital of UAE, Dubai is an international investment destination due to its stable financial system. Providing financial support to entrepreneurs in the form of business loans is not a difficult task for banks in Dubai.

Business loans in Dubai are quite easy to obtain with many banks and credit companies offering different kinds of packages. If you want the best out of small business loan keep in check 5 Cs of your credit which are capital, capacity, character, collateral and any other ‘condition’ from lender. As easy or convenient they can be obtained, that does not make them risk free. In this blog, we will shed light on different forms of business loans in Dubai and what are certain risks and factors you must consider before applying for small business loan in Dubai.

Forms of Small Business Loan in Dubai

Standard Business loans

Under this format, you typically pay monthly payment for specific period of time. The terms and amount of payment are decided before and they cannot be adjusted with time. However, in case you are taking loan with variable rate, the terms and amount may change. If you do not fulfill terms and conditions of bank, your bank has right to terminate the contract and your account.

Business loan from a friend or family

You can also ask for business loan from a member of your family or any friend. Advantage would be of flexible conditions and not much of interest but risk would be that you can ruin this relationship if unable to pay back.

Small Business Association

In case that local bank does not grant your business loan in Dubai, you can apply to SBA (Small Business Association) for it. SBA loans are backed by government. They are good option for small businesses but risk is that if you are unable to pay back, government will come for you quite hard. As consequences for not paying back are worst so people usually avoid it.

Credit Card Loans

Small businesses are allowed to get advance cash via credit card but the downside is high interest rate. It’s really hard to get out of the debt but is still less worse than SBA loan.

There is risk involved in every type of business loan and it is quite understandable because lenders need some security as they are entrusting you with their money.

Getting business loan in Dubai is quite easy provided you have original and valid documents. Amongst them, the most important is Trade License.

Trade License

Trade license grants permission to a businessman by the government to run his business. It depends upon your business activity that what type of trade license you require. Its fee also varies accordingly. Most entrepreneurs prefer general trade license which allows them to carry out business of all commodities. Trade license is important not only to get business loan but also for other kind of loans such as personal loan, home loan, auto loan.

Other documents required to obtain business loan in Dubai are,

  • Business contract (in case of partnership)
  • Passport
  • Bank statement
  • Emirates ID

Eligibility Criteria to get Business Loan in Dubai

You must know whether you are eligible for bank loan or not. Not every bank has policies that cater to your needs. Rather they have their own eligibility criteria. Most importantly, before lending loan banks observe nature of business and profile of directors/partners/shareholders. Banks analyze their risk in the business that how established it is and how long has it been in the industry and the kind of assets it owns.

The most common requirements are,

  1. Business should be running for at least 1 year.
  2. It is easy for a branch or representative office of an offshore company to get a loan
  3. Minimum annual turnover amount

Banks set interest rates for business loan. Interest rates are usually lower for SMEs (Small and Medium Enterprises). SMEs have great contribution towards UAE’s economy. Recognizing their importance, banks and other financial institutions are giving business loans to SMEs.

The criteria for SME to get business loan is not fixed entirely. It depends upon,

  • Business of the client and the industry he is operating in.
  • Historical performance
  • Financing or risk alleviation needs vs. what has already been sourced
  • Plans of client regarding future of business

Amongst all the factors in determining loan amount, most important is turnover. Business’s bank account and audited financial statements depict the turnover of company.

Other Benefits

Apart from business loans, other benefits given by banks include

  • Free credit cards
  • Free life insurance cover
  • Shariah compliant business loans
  • Option to choose between fixed interest rates or reducing interest rates
  • No need to provide security for the loan

Getting business loan in Dubai is easy but tricky process. You have to get the right license and prepare necessary documents for loan approval. Banks in Dubai place strict compliance rules. If there is any discrepancy between business activity and license, bank will reject your loan application. In order to avoid this, we encourage you to contact our experts who will guide you correctly for obtaining loan for your business. Visit KWSME company formation services for more information.

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