How To Get Finance for your Business in the UAE

Oftentimes you start a business that you cannot scale quickly, unless you obtain financing. You may need finances for your IT project, which you need to market actively online to get the users, this also applies to projects, where you require to build complex infrastructures (for clean energy and waste disposal projects, for example) and to projects in some other industries. In general, there are several approaches, which are mostly in use in the UAE for raising funds.



First, the most obvious and the easiest is partnering with businessmen who you already know, who have their own funds to invest, while you will offer your expertise and professional knowledge. Or maybe you will also contribute financially.


Second one is to take part in pitching your project to investors. Annually, multiple events are organized all across Dubai, where young entrepreneurs have an opportunity to present their start-ups. While in the case we just described before you may not even have a business yet, but great ideas, to pitch a project to investors you need to have a working business and, more importantly, a business that is easily scalable. Investors will be evaluating not only the idea, scalability of the project, they will be also looking as to how quickly you grow and would want to know the figures and study your growth trajectory. Angel investors, how they are often called, most often look at IT projects, as this is the industry, which grows exponentially.


If you want to start a rather conventional business, to trade with food products for example, this is a project you will hardly be able to pitch. In case you do not have any business experience at all, we in general do not recommend to start with financing. Initially, you need to learn the ropes, before you proceed with seeking investments. As we said, conventional businesses are hard to pitch to investors, unless you introduce some know-hows there. As a result, business owners are usually seeking financing from the local UAE banks.


At the beginning businessmen start looking for the banks that do provide startups and Small to Medium Enterprises with bank loans. At the moment Emirates NBD, ADCB and RAK Bank are a few banks that do offer business loans to SMEs and Startups. Keep in mind, you may first want to do a research on several banks on your own and look at such important factors as interest rates, collateral and even the repayment periods available. This will allow you to choose the bank that best suits your business needs.


It is a well-known fact, that in the UAE obtaining a bank loan for an SME or Startup, can be very difficult. You should be also aware, that most start-ups are doomed to failure in the first years, therefore, the banks would be taking a huge risk, accepting applications of start-ups. As a result, before you can apply for any financing of your business with the bank, you need to have several years of successful operations behind your back, a good credit history, a certain turnover and showcase, how you can guarantee the loan re-payment.  


The next big question would be what are the banks looking for when reviewing your application. To put it simple, there is no rule of thumb in the UAE. Every bank is different; it even differs depending on the industry the company is in. Therefore a few general things can be mentioned.


Cash flow is often overlook in the day to day operations of a company. Banks however pay clear attention to a company’s cash flow through daily operations. This is due to the fact that it is a clear indicator of a company’s financial health.


Business owners and company’s management needs to have sound professional knowledge. Banks often notice that SMEs or Startups, do not have sufficient knowledge of the industry or field they are in. A lack of experience in the said industry is also cause for concern. Therefore, it is important for the management of the entity to prove they have the sufficient experience and knowledge in order to ensure the success of the enterprise.


Business Plan is another important part. This may seem rather obvious; however, a clear well structured business plan is vital for the success of obtaining a loan. The banks will scrutinize the business plan in order to see, if the company has a clear vision and realistic expectation for it’s success. Even if your application is flawless and meets all of the requirements, a poor business plan can be the cause of being rejected.


Corporate governance is a key indicator of the riskiness of an enterprise. Banks view companies without a well structured corporate governance as risky. Thus, it is important to have a corporate governance structure in place, it must be stable and you need to be able to showcase this structure to the banks.


It is also important to keep in mind that transparency and good communication is important when dealing with banks. Do not be afraid to discuss any matters, be it even difficulties with the company. This will allow the bank to be aware of any circumstances, preventing matters from unexpectedly causing issues in the long run.


Most banks are attempting to make the procedures of obtaining loans hassle free, resulting in each bank having their own set of required documents. In general, however, you can also expect to be asked to provide certain corporate and financial documents, such as, company’s Memorandum of Association, Incorporation Certificate, Company License, 6 months’ worth of bank statements, etc.


In the end, you will submit your application, alongside all the requested documents to the bank. Your application will then be sent to the bank’s compliance department. The compliance department will review every detail of your application and documents. This will allow them to decide, if the loan will be granted. There is no general rule of thumb that will guarantee approval. Banks in the UAE review every single individual application to determine whether the loan will be granted. Therefore, every situation is different.


So we have just discussed about all options for financing your enterprise. But there is still one more, that is quite new to the UAE and it is a crowdfunding. Previously there were no regulations for crowdfunding in Dubai. The Dubai Financial Services Authority (DFSA) has recently introduced new rules regarding crowdfunding in Dubai International Financial Center (DIFC). The rules are set in place to help small, medium and startup businesses raise funds using crowdfunding. The new regime has been set in place to develop the SME segment in the UAE and to promote sustainable development. Recently the first international crowdfunding platform joined DIFC and received the relevant license.


As such, you can draw the following conclusions from this chapter. There are several options to finance your start-up or existing business. Regardless, which option you choose, we highly recommend to consult the legal and financial professionals. We also do not recommend novice entrepreneurs to seek any sort of financing, unless you are supported and advised by professionals. You first need to gain relevant business experience and learn the ropes. But it is still always good to know, which financing options you may have in the future, once your business successfully grows and expands.  


    If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.


 Disclaimer: Business Boutique is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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