Promising SME’s funding avenues in UAE.

Operating a SME can be stressful with the pressure of an economic downturn. The outbreak of the coronavirus has slowed the global economy and most companies are in a state of flux. As this epidemic evolved to a pandemic, it is projected that this ordeal may last for considerable period. In the face of this uncertainty, many Small Medium Enterprises (SME’s) are already struggling to maintain their financial stability. What relief is available for these companies?

Funds, although money cannot fix all the problems in your business, having enough funds can help you with your business stability and growth.

Thus, we put together a list of SME funding avenues in the UAE to help entrepreneurs make their venture a success.

Private funding

Your family, relatives and friends are always a good way to find funds for your businesses. You can ask for someone close in your life to loan some money or get them to join your idea by offering shares of your business. This is the commonly happening funding avenue for most SMEs all over the world. In this method, less complex and easy to access is the key. As many SMEs not able to comply with requirements to have funding form outside parties.

But with this, there is always the risk of ruining your relationship with your friends or family members if your business plan goes sideways.

Crowd funding 

This is one of the best ways to attract private investors to fund your business idea. You need to pass-through screening process of your business by the platform providers to eligible to your business to attract investors. This method is very popular among new generation as it involves digitally present your business idea or business to many investors strongly. In many cases platform facilitate in digitally to meet inventors and business owners. You will have to have strong social media campaigns to promote your business idea to generate interest. There are many crowd funding platforms you can use for this. Some of the UAE Crowd funding entities with web address are mention below for your easy reference.

Government support

The UAE government also offer several funding schemes for small businesses. UAE has identified SME sector as the key to economic development, and taken many initiatives to facilitate SME business owners. In particular UAE is welcoming new innovations and invest more on technology over the past years. There are many funds allocated to help SMEs and some of them are named below for your reference.

  • Khalifa Fund
  • Mohammed Bin Rashid Fund for SME

These funds often take interest in a project that helps the local economy such as projects in agriculture, Technology, fishing, farming and home-based businesses.

Venture capital and angel investors

Venture capital and angel investors invest in businesses in exchange for equity. Such investors are often experienced entrepreneurs thus will only be interested in business ideas that have long term expansion potential. You need to exchange your business ownership to third party and they will also will involve in the management of the business functions. You are capable of getting more structured entity with these types of investments. Further, you need to have proper business setup with all compliance as the venture capital will evaluate your business or idea covering all the aspects of your business.

When you are approaching a venture capitalist or an angel investor it’s important that you perfect your pitch and learn your numbers well.

Asset financing

Asset financing is short term loan use to finance tangible or movable assets. This includes vehicles, equipment, storeroom or machinery required for the day to day activities of your business. This is one of the popular funding avenues among SME’s in UAE over the past years, to fund the assets they needed for their business. When you have confirmed business and need funding on the fixed assets you can look for this solution and the rate of borrowing cost also less compared to other business loan. You need to provide asset ownership as collateral to the bank. Comparatively less paperwork.

Bank loans

Although bank loans are not the easiest to obtain, you can’t discount bank loans given the stability it can offer you. Make sure you have a good credit score before you apply for a bank loan to increase your chances to get your loan passed. Normally you need to have a good record of running business activities for some minimum period and it is difficult to get funding for newly started business. Interest rate would be high compared to other methods. In some cases, you need to get help of a consultant to provide and prepare your entity information to submit loan application. In this case you need to provide audited financial statements for funding institution from bank approved auditors.

To know more about how you could fund your SME, please refer and we can guide you to keep running with your business.

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