The Best Business Loan in The United Arabs Emirates

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 UAE, Everything you need to know.

1. Commercial Bank International (CBI)

  • Net loan amount of up to AED 500,000
  • Has a tenure period of up to 48 months
  • Attractive interest rates of 5.25% per annum
  • Creditworthiness is a key factor
  • Excellent loan terms and conditions
  • Fast online application procedures
  • Loan purpose is not limited

2. Noor Bank

  • Has a loan limit of up to AED 1,000,000
  • Flat interest rate of 2.75% and a reducing rate of 4.56% p.a
  • Flexible repayment period of up to 48 months
  • Fast payout within 10-15 minutes
  • Available for diverse purposes
  • Laxer eligibility criteria
  • Low processing fee of 1%
  • Favorable for clients with income stability

3. Union National Bank Personal Finance (UNB)

  • Friendly interest rates of up to 4.5% per annum
  • Offers a repayment period of up to 48 months
  • Loan amount varies as it is 20 times your salary
  • Favorable for those in employment 
  • Provides a wide range of loan purpose
  • Lower application fee
  • Fast online application steps

Business Loans in UAE, All You Need To Know:

FUNDGECKO is focused to help you acquire the relevant information on current business loan offers in the markets, how the loan works, and the procedures to acquire an option that best meets your needs. 

What economic measures has the government implemented for companies through covid-19?

Just like in every other nation, the coronavirus pandemic had the potential to negatively impact the economy of the UAE. The UAE Government intervened with measures that would help cushion the businesses and at the very least sustain the economy as enterprises, industries, and every sector of the economy had begun to feel the bite of the pandemic. Here are some of the measures put in place:

  • All secured loans with diverse collaterals were reduced to a zero rate of interest cumulatively throughout the pandemic period. This eased the strains faced by loan borrowers during repayment.
  • First time loan borrowers were offered an increase in loan value ratio by a rate of 5%. This motivated new applicants to survive along with loans.
  • The UAE Central Bank made a step in reducing policy interest rates more than twice by combining basis points up to 125.
  • All payment service fees charged by Central Bank were partially postponed for 6 months. These included the tranquility of advanced and net stable ratios.
  • Banks’ exposure to risk-weighted assets such as real estate investments was increased from an initial value of 20% to 30%. This diversified income sources hence generating more sustainability of income supply.
  • The government issued a 7.2 billion fiscal package that facilitated liquidity in the economy, credit guarantees, reimburse commercial lease fees, reduced government fees charged on projects, and offered electricity and water subsidies.
  • SMEs and other mini-business operations were offered reduced bank rates and fees. This facilitated their going concern for the unenforceable future.
  • The UAE government also offered bonuses for brand-new investments where COVID-19 and other elements, such as the environment, had an impact on the investment.

Distinguishing types of company profiles

Your business profile is one of the variables that determine how much money you can get for your organization or company. The traits of your business profile have a significant role in determining the processes and type of finance you receive. Different business profiles come in many forms:

Companies

  • Entrepreneurs: This kind of business has not yet come into existence. Instead, it is merely a concept that has likely been planned for and is awaiting funding to become a reality. 
  • Start-ups: As there are various requirements for business loans, this type of firm might not always be eligible for finance. Start-ups are existing companies in the physical world. They could yet experience sustainability issues.
  • Consolidated companies: As these organizations possess a reliable operating system, consistent revenue, and a history of operation, these businesses will have no trouble obtaining business loans. This inspires some kind of trust in lenders to finance them.
  • Large companies: These firms either operate on a national or international scale. The financial requirements are also enormous, typically in the millions or billions of euros. For instance Noor bank and Union National Bank among others.

Self-employed

  • As legal entities: They are owned by independent experts who may need funding for their businesses. Depending on their stage of operation, their entities may be categorized as start-ups or consolidated enterprises. But the loans their company obtains will be seen as belonging to a single person.
  • As natural persons: These professionals take out personal loans to finance their endeavors, such as purchasing a property or automobile, among other purchases. In addition to their jobs, they also rely on other sources of money.

Characteristics of business loans 

As discussed before, the type of financing that your company is eligible for depends depend on your business profile. The qualities listed below should be considered regardless of how particular the loan choice you choose is because they apply to all loans.

  1. Cost: This may vary depending on the type of company profile and the type of credit offered. Following the most recent data published by banks in the UAE, the average cost of loans to companies of up to 750,000 euros ranges from 15% to 24%.
  1. Term: The agreement and the contractual terms decide the payment time, just like they do for the loan amount. Larger loans typically have longer repayment terms, up to 10 years, but smaller loans may only have a 3-month repayment time.
  1. Loan amount: There isn’t a specific standard loan amount because it depends on your profile, savings, and other criteria that the corporation will establish.
  1. Purpose: Among other things, you might desire to finish large projects, settle distributor arrears, consolidate existing business loans, or expand your company. The loan purpose should always be specific before acquiring the loan.
  1. Grace period: This is the period between loan disbursements and before making the first installment of repayments. This period does not attract fines and penalties.
  1. Linkage: For you to be eligible for a loan, your lender could need that each of the loan recipients has a business account with them, a savings account, insurance, or any other relevant items.
  1. Repayment: After the term, you may have the choice of returning the entire loan amount plus interest and any commissions that have accrued, or your lender may ask you to make payments in monthly installments.
  1. Concession: Knowing in advance how quickly the money will be issued may assist you to make that decision because you could need the money right away. While some lenders may send the money in only a few minutes, or days, others may need months.
  1. Guarantee: For the loans they offer, the majority of lenders want some kind of security. So, if the loan amount is large, the lender will want “payment insurance.”

Where to get business loans

There has been a significant rise in banks and other financial institutions offering business loans and other financial products at extremely competitive rates, as the UAE is among the top countries in the Euro Area for having developed financial systems and soundness in banks. In December 2021, the UAE’s average lending rate was under 4.5 %, which is something to consider.

  • Companies and private capital lenders: Because loans are processed online, getting money from companies in this category has never been simpler or more accessible. They ensure quick concessions, in other words. Their financial offers and products are frequently less expensive than those of banks as well.
  • Banks: In the UAE, there are more than 53 banks, each of which offers a variety of products according to its distinct criteria. Your company will need to be highly solvent to be approved for a business loan because most banks prefer to fund consolidated enterprises.
  • Companies and private capital lenders: As loans are executed online, getting money from companies in this category has never been simpler or more accessible. They ensure quick concessions, in other words. Their financial offers and products are frequently less expensive than those of banks as well.
  • Alternative financing platforms for crowdlending: These are websites that let businesses link us up with individual investors. These investors will determine whether or not to invest in your company once we have requested a business loan from them. We will be compelled to pay interest to the investors as repayment. The entire procedure is carried out online, and it can take two days to get a response.

Business loan conditions

For business financing, various entities will have different needs.

Some of the typical criteria are listed below:

  • National registration: If your firm is registered, some parties will be able to determine whether you are legally permitted to operate a business in the UAE, whether you are a local or an ex-pat.
  • Annual income: Businesses must maintain account records, annual financial statements, and annual reports by UAE law. Your lender may require this information to assess the viability of your enterprise and ultimately choose whether to grant you the credit you are applying for.
  • The seniority of the company: Many lenders are hesitant to lend to companies that have been operating for less than a year. Nevertheless, if your company is only a few months old or just getting off the ground, you might find alternative financing sources.
  • Credit history:  Before a borrower is approved for a loan application, they are always checked through if they comply with the credit bureaus in the UAE. These will help lenders determine if you have a poor credit history.
  • Tax compliance: Some lenders will need to confirm whether you have been complying with the tax authority for more eligibility.

Depending on the organization from which you request funding, you could need to satisfy fewer or stricter requirements.

Documents needed to get funding

  • Proof of payment of corporate tax
  • Company’s updated balance sheet turnover
  • Annual VAT returns for the present and previous year
  • Proof of income tax returns
  • Bank statement for the previous 3 months to show income and expenses flow
  • Loan clearance certificates from previous loan lenders

The documents may need to be delivered in person, mailed, delivered by courier, or sent online. Different entities could need different amounts of paperwork.

Other forms of financing for companies

  1. Business credit lines

With corporate credit facilities, the borrower can withdraw cash as needed until their credit limit is reached. The borrower will not pay back the whole amount of the loan; rather, they will only pay back the amount they have withdrawn plus any applicable interest. This product is provided by many UAE lenders.

  1. Factoring

The lender pays for our invoices to one or more suppliers under this sort of financing for SMEs. The provider will then want us to pay the bill in whole (with interest), in part, or over time.

  1. P2B or crowdlending loans

A private lender may choose to invest in our company through an online platform or may decline to do so for a variety of reasons. When you contrast one platform with another in terms of the loan quantity and terms and circumstances, you’ll observe various offerings.

  1. Loans with mortgage guarantee

With these loans, we can only receive funding if we can provide real estate (a mortgage) to be utilized as a guarantee. Due to the lengthy appraisal procedures, these loans take longer to be conceded.

Products to invest in your company

  1. Equity crowdfunding

On this platform, a borrower and an investor are connected. Until our company is stable, private investor makes investments in it. It’s crucial to keep in mind that after funding your company, the investor will receive a portion of the company’s ownership and revenues.

  1. Business Angels

Equity crowdfunding and business angels are similar in that a group of investors chooses a company in which to invest jointly. Similar to crowdsourcing, the investors will receive stock in your business. 

  1. 3F (Family, Friends, Fools)

The conditions of the loan and advances from each of the above parties are dependent on the memorandum of understanding between you and the lender.

Aid for the financing of companies

  1. Capitalization of unemployment

This choice will be most advantageous to you if you’re self-employed and wish to launch a business. 

  1. Subsidies

Increases in federal subsidies were brought about by the Covid-19 epidemic in the UAE. To find out how to apply for a subsidy, visit internet portals in the UAE.

  1. Crowdfunding

You could find a private investor interested in supporting your company or project through these online sites.

About this page, our methodology

What this page is for: We are committed to assisting you in obtaining the loan that best suits your financial circumstances. As a result, we explain what online guarantee credit cards are here, how to evaluate them so you can decide which one is best for you, and which deals are now the most alluring.

Source: information about regulation on consumer credits has been drawn from the UAE Law on credits, UAE Central Bank, government portals, among other reliable sources.

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 an online comparison tool that aims to make the loan application process simpler for its users. We evaluate the best available options and provide consumers with the necessary knowledge required to select the best option. 
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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