The Best Business Loans in Saudi Arabia

Compare the best options on the market and choose the one which best adapts to your day to day needs.

Further Below: Our Guide To Business Loans in Saudi Arabia, Everything you need to know.

1. Riyad Bank-Tawarruq

  • Offered to applicants with a salary minimum of SAR 3,000
  • Offers a flat interest rate of 1.32%
  • Flexible repayment period of up to 60 months
  • Attractive loan conditions
  • Less stringent eligibility criteria
  • Unlimited loan purpose
  • Does not involve salary transfer

2. Emirates NBD

  • Salary minimum of SAR 15,000 for loan applicants
  • Favorable interest rates of 7.4% per annum
  • Offers loans for various purposes
  • Maximum repayment period of 5 years
  • Hassle-free application procedures
  • Fast concession

3. The Saudi Investment Bank

  • Get a loan of up to SAR 1,500,000
  • Competitive interest rates
  • Same-day loan disbursement once approved
  • Tenure period of up to 60 months
  • Applicants with stable income are considered
  • Provides unsecured loans
  • Whole scale digitalized application

Business Loans in Saudi Arabia, All You Need To Know:

It is important to us that readers understand every aspect of Saudi Arabian business financing, including the different types of credit that are offered, the requirements for receiving loans and grants, and the paperwork that must be submitted. Additionally, we streamline the loan application process by arming the user with all the insider tips for obtaining credit that best suits their unique circumstances.

[UPDATE] What economic measures has the Government implemented for companies through covid-19?

Like many other nations, Saudi Arabia began implementing measures and legislation at the start of the epidemic to protect businesses from the virus’ severe ravages. The Saudi Council of Ministers, working with the Saudi Arabian Monetary Authority, allocated SAR 150 billion to boost the economy of the nation, focusing on various sectors and a variety of target populations, including the wage and salary workers, the self-employed, micro-, and SMEs. 

  • The Development funds were initiated across the banking sectors to regulate the economic constraints faced by private sectors during the pandemic. These will provide support in the following fields:
  1. Finance working capital was provided with a net worth of 1 billion to finance both direct and indirect loans provided for consumer credits.
  2. Loan repayment periods were extended to future periods for the companies that were much affected by the pandemic. The allocation made for these rescheduling amounted to SAR 6 billion.
  3. SAR 4 billion was allocated to low-income families which provided social loans to satisfy their financial needs during the crisis period.
  4. Indirect lending institutions were provided with SAR 2 billion to ensure continuous lending to potential borrowers.
  5.  The interest rates charged on loans undertaken were reduced to lower rates to make it more achievable for borrowers.
  • The Saudi ministry of finance provided support to Saudi riyals of SAR 120 billion in the following departments:
  1. Commercial businesses’ payments and submissions were postponed for three months. These were inclusive of tax owed and tax declarations, income tax payments of other financial obligations, payments of zakat returns, and zakat owed among others.
  2. All government service fees due and other municipal fees were postponed.
  3. Uncleared loan installments from development allocations were temporarily waived to a period of 9 months.
  4. SMEs were provided capital by the  Saudi Arabian Market Authority to maintain their going concern concept to the unforeseeable future.
  • To aid small businesses and SMEs, the government would offer credit guarantees that would pay their existing expenses for around three months.
  • Through the earning loss allowance scheme, self-employed business owners whose operations were halted by the lockdown received compensation or insurance benefits.
  • Due to the pandemic, SMEs that were already overextended was given a “COVID-19 Grace Period” that lasted three months and an additional three months upon request. 

Distinguishing types of company profiles

Your business’s financing is based on several factors. Your company profile, among other factors, is a significant determinant of the type of financing you receive. Let’s explore the various company models: 

Companies

Entrepreneurs: This alludes to a standard projected business. It comes to fruition once the business owner secures funding. The business owner, though, is merely preparing for it.  

Start-ups: This kind of enterprise already exists but hasn’t yet gained popularity. The company can still be losing money, and it might not be making much money. At this point, the owner might need to obtain funding, which presents a challenge if the company is not sufficiently solvent. The majority of lenders will be reluctant to provide finance for a company that isn’t able to guarantee loan repayment. Consequently, the company may not be profitable for the owner.

Consolidated companies: This kind of company has been there for a while, generates a lot of revenue, and is financially sound enough to get approved for some good loans. When financing the company, the lenders rely on its financial stability. The company is enduring.

Large companies: These are companies that operate on a huge, either national or global scale. The required funding is likewise enormous, typically measured in millions of euros, dollars, or francs, if not billions. For instance the Riyad Bank, Samba, Banque Saudi Fransi, and Alawwal Bank among others 

Characteristics of business loans

The type of business loan mainly depends on our company’s credit profile and type of credit. Regardless of how unusual the credit is, the following are some of the most typical traits to watch out for:

  1. Cost: Your business profile and the sort of credit firm may impact the cost of your loan. Saudi Arabia has worked to maintain its average lending rate, which as of 2022 was, 3.48% according to statistics. However, long-term loans have cheaper interest rates compared to short-term loans.
  1. Loan size: This depends on the specific requirements, goals, and prospects of your organization. It will also vary from one lender to the other.
  1. Purpose: This applies to a variety of activities, including making purchases, paying off debts owed to suppliers, and increasing investments like those in new machinery.
  1. Grace period: This is the period where the borrower does not pay the loan installment and does not attract any penalties. It is a relaxation period.
  1. Linkage: A company loan typically comes in a batch. Consequently, you should be aware of any associated products that could result in additional purchase expenditures. 
  1. Repayment terms: The length of your payback period will depend on the sort of credit you have; nevertheless, maturities might range from 3 months to 60 month
  1. Guarantee: Different guarantee terms will be determined depending on your business profile and loan size. If you’re requesting a substantial loan, you could also need to provide collateral in addition to payment insurance.
  1. Speed: The period of loan disbursement should be a factor of consideration as some lenders take longer periods to assess your application before releasing money into your account.
  1. Repayment: Some organizations will ask you to pay in regular installments, while others will expect you to make a final lump sum payment with interest. Choose the option that best suits you as a result.

Consumer credit regulations in Arabia are defined by the government, however, non-bank lenders may have their own set of requirements for applicants. Therefore, it’s crucial to be certain of the contract’s terms before applying for a loan. Before taking out a loan, do your own investigation into the credit company’s background and reputation.

Where to get business loans

As the desire to depart from the traditional method of credit provision grew stronger, more entities entered the Arabian financial sector. Non-bank loan providers have emerged to compete with banks in terms of the terms of their loans.

  1. Banks: The business seeking the loan must be a legitimate entity and be highly solvent. Banks have numerous financial products with flexible interest rates.
  1. Companies and private capital lenders: The majority of lenders in this category allow borrowers to apply for loans online, which makes the process much simpler and quicker. Many individuals choose them since the application process is quick, can be done from anywhere, and the credit has fewer qualifying requirements than in banks. The loan size is, however, typically lower than innovative banking credits.
  1. Alternative financing platforms for crowdlending: These platforms will connect us with individual investors, who will then determine whether to provide operating money in response to our requests for business loans. These investors will profit from our degree of risk, which we will compensate them for by paying them interest. All of these credits are processed online, and we will receive a response in 48 hours.

Business loan conditions

The criteria for receiving funding will differ depending on the type of loan we seek as well as the organization with whom we choose to submit the credit application. However, all businesses must adhere to a few fundamental requirements to be eligible for loans:

Annual income: Your account records, annual financial statements, and annual resorts are a few items you’ll need to have before being approved for business credit. For the lender to determine if you can repay the loan, they will need this information.

Employment period: In Saudi Arabia, for a borrower to acquire loan eligibility, they must have worked with their current employer for a period exceeding one financial year.

National registration: A company can only be legitimate under Arabian law after obtaining national registration. As a result, before financing your firm, lenders will check this as one of your credentials. To prevent disqualification, make sure to fulfill all registration criteria before applying for a loan.

The seniority of the company: Your business’s stability and the type of loan it is eligible for are dependent on how long it has been in operation. A business that has been operating for less than a year will be given funding before one that has been operating for five. 

Credit history: Your company will be immediately denied a business loan if it has a bad credit history. Before approving your loan application, the lender will verify with various credit bureaus. 

Note: The creditor is not compelled to provide you the loan, whether or not you meet all of the standards for financing.

Documents needed to get funding

  • VAT returns for the most recent and earlier years.
  • Account Statement (if in another bank).
  • Income tax return.
  • An updated turnover balance statement for the business.
  • proof that corporate taxes have been paid.

The lender may request that you mail, deliver by courier, email, or drop off the documents as mentioned above at their offices. Verify with the entity to see if they need any other papers in addition to those we’ve listed above.

Other forms of financing for companies

  1. Business credit lines

Unlike other forms of financing, business lines of credit allow borrowers to withdraw funds incrementally and repeatedly up to the borrowing limit. Additionally, rather than paying back the whole amount that the lender extends, the borrower is only expected to pay back the amount they have withdrawn plus interest. Many borrowers choose this kind of finance, especially when they require ongoing small-dollar funding. 

  1. Factoring

Small and medium-sized businesses benefit most from this sort of financing because the borrower can use the money to pay all of his suppliers’ invoices. Depending on the agreed-upon loan terms, the borrower will be required to pay the lender the sum utilized to settle the invoices plus any accrued interest

  1. P2B or crowdlending loans

In Saudi Arabia, commercial crowdlending takes place on an internet platform where the borrower receives loans from a crowd. The internet marketplace links lenders and investors. Depending on our agreement, the investors may decide to directly finance the company or fund particular projects.

  1. Loans with mortgage guarantee

In this case, the borrower will have to provide real estate property that will serve as a guarantee. The borrower won’t get financed without collateral. Since there are evaluation procedures involved, the application process often takes longer. Therefore, it could not be the greatest choice if we require quick financing.

Products to invest in our company

  1. Equity Crowdfunding 

Crowdfunding, as the term implies, entails obtaining capital for businesses that have been raised by numerous people or organizations. You can sell your investment instruments, such as company shares and others, using crowdfunding portals.

  1. Business Angels

Platforms for business angels connect investors and borrowers. Business angel investors choose the companies they will invest in rather than working with specific business owners. Once they decide to work for your business, they will always be in the management. If you’re simply working on a small project, you might lose the chance to receive funding from business angels.

  1. 3F (Friends, Family, Fools)

The 3 F’s (Friends, Family & Fools) are a further source of funding for our company. The sum and other terms are determined by the agreements made by the two parties.

Aid for the financing of companies

  1. Capitalization of unemployment

When a borrower wishes to launch a business but is self-employed, only this sort of financing is possible. If the borrower uses the money to start a new business, they will be eligible for full unemployment benefits.

2. Government Subsidies and Grants

There is a lot of government assistance available to establish or expand businesses. Always visit government urgencies on development projects and corporate subsidies. This will help in the evaluation of your business whether it is eligible for subsidies or grants before setting focus on a particular option.

About this page and our methodology

About this page: We take great pride in assisting you in obtaining the best financial product that is appropriate for your financial situation. To help you choose the most appealing offer at the moment, we gather the best information about consumer credits, how the various credits work, and how to compare your options.

Source: Information regarding the main characteristics of loans in Saudi Arabia and their current regulation comes from Government websites, World Bank statistics, Saudi Arabian Monetary Authority, among other reference portals.

Methodology: The data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources.

About Us: FUNDGECKO is a commercial comparison site that focuses on products for personal finance and home improvement. We support our users by assisting them in comparing the financial solutions that are offered on the market as well as by offering comprehensive information that will speed up the decision-making process and enable them to choose the best deal.
Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.

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