Whether you’re a large corporation or an SME, banks and financial institutions in UAE offer loans to help out. However, there are many factors that can affect your choice of institutions! In addition to that, you have to meet some requirements to be eligible for business loans in UAE. So today, we’re gonna break it all down together and learn more about how you can fund your business in the UAE, shall we?
Why Do Companies Need Loans?
First off, there are many reasons a company might need to get a loan, and it’s not only about debts. So, here are some of the most common reasons companies take out business loans:
- Working Capital: Between expenses and revenues, there ought to be gaps during certain times. So companies go for a loan to have the liquidity they need for expenses during these times. This includes the low-season periods during which business isn’t as rich as other seasons.
- Expansions: Sometimes, a company gets the opportunity to expand and open new branches. It might also require new equipment, machinery, and such in the case of an expansion. The extra capital would definitely help with these investments.
- Startups: New business ventures will definitely need funds to launch. However, not everyone has the capacity to do it, and business loans in UAE definitely help. This will aid these startups in case they need to develop products and such.
Why Are These Loans Popular in UAE?
These are some of the most popular reasons for loans among others. And business loans in UAE are pretty popular because the banks offer nice incentives including collateral-free loans! Moreover, the UAE is a hug for growing businesses and it always welcomes new projects. That’s why it encourages SMEs to get loans!
Eligibility Requirements for Business Loans in UAE
If your company is looking to borrow a business loan in the UAE, it has to meet a set of requirements. Of course, the details can vary between banks, but the general guidelines are the same. So, let’s take a look at them now:
- The Age of the Business: So if you’re going for a big loan from banks in the UAE, your business should be at least over a year old. (1-2 years to be specific). However, there are always other options to explore for startups, not to worry there.
- Turnover Per Year: To be eligible for business loans in UAE, there is always a minimum turnover threshold to meet. This usually depends on where you’re taking the loan from, but it typically starts at 1 Million AED (roughly about $272k).
- Owner’s Nationality: In the UAE, some banks require that part of the ownership nationality of a company is local. This is especially true if the project is government related.
- Type of Business: Another requirement or eligibility criteria here is the type of business or the industry a company operates in. The bank decides whether to give out the loan based on whether that business aligns with its goals or not!
Documents You Need for Business Loans in UAE
Naturally, if you wanna go for business loans in UAE, you need to provide the right documentation. And if you don’t know what these include, here are the required documents:
- Company Documents: This includes the company’s trade license in the UAE, proof of business, company registration documents, etc…
- Financial Documents: These documents usually include audited financial statements, bank statements, future financial projections. That last one could also be included in your business valuation if you ever need one.
- Identification or Personnel Documentation: If the owner is a UAE resident, you need the ID. If not, copies of passports and visas of the owner, shareholders, and key personnel are a must. Oh, and of course, bank statements of the people we already mentioned do help with credibility.
- Loan-specific Documents: Naturally, you will need to fill a form and sign it to apply for a loan. And you need to provide documents for collateral, as well as documents or pre-existing loans.