Business Setup in Dubai UAE – Ventures Buddy

If you are a business owner or plan to start a business startup in Dubai, then you must know the requirements of the constant flow of funds. Whether you are going to start a new business setup, launch a new branch of your existing company or purchase some new equipment or furniture, you need finances. A business loan can help you with every financial need of a business.

This blog will guide you through everything you need to know about applying for a loan in the UAE. Keep reading if you are going to apply for a loan in Dubai.

Different types of business loans in Dubai

You must know the different types of loans available in the UAE before you are going to apply for your business loan.

Conventional loan

  • Business loans in Dubai are offered at competitive interest rates and customized according to the specific needs of your business.
  • Banks and financial institutions assign dedicated relationship managers to assist you throughout the application process, guaranteeing a personalized service.
  • Notable banks providing business loans in Dubai include Aseel, Dubai Islamic Bank, Emirates Islamic, Emirates Money, Gulf Finance, and Noor Bank.
  • Repayment can be made in installments over a fixed duration of time, with an interest rate applied to the repayment amount.

Islamic finance

  • Whether you are going to start a mainland business or a free zone company setup in UAE, the Dubai financial market offers you the concept of Islamic finance.
  • Islamic loans are worked under the Shariah framework – in which, it is forbidden to earn interest through the lending or borrowing of money.
  • But rememberthat while Islamic finance does not involve interest charges, it does require a portion of your profits.
  • These types of loans are not available for businesses dealing with alcohol and tobacco.

SBA-backed loan

  • If you are a business owner struggling to secure traditional financing. The Small Business Association (SBA) Backed Loans, supported by the UAE government, are here to provide a safety net for you.
  • These loans are designed to assist businesses that have been rejected by other loan applications, giving them another chance to secure the necessary funds.
  • Don’t let financial obstacles hold back your business; take advantage of the SBA Backed Loans and get the support you need to succeed.

Business loan in Dubai- eligibility criteria

Understanding the eligibility criteria for loans is crucial as these may vary across different banks and financial institutions. However, the following are the typical requirements that applicants must satisfy:

  • The applicant must be at least 21 years old.
  • The business should have been operating for at least one year (although some banks may require a longer period, such as two years).
  • The applicant must hold an existing corporate bank account.
  • The business must have an annual turnover that meets the bank’s specified threshold, usually at least AED 1 million.

Business loan in Dubai- Documents required

If your business startup in Dubaineeds a loan, you have to prepare the following list of documents before you are going to apply for a loan:

  • Trade License.
  • Bank application.
  • Passport copy of loan applicant.
  • Bank statements from the past 6 to 12 months.
  • Copy of Articles of Association.
  • Copy of Power of Attorney.
  • Copy of Memorandum of Association.
  • Profit and loss statements.
  • Home residence tenancy agreement.
  • Audit reports.
  • List of employees from the Ministry Of Labour.
  • VAT certificate copy.

Business loan in Dubai- what to consider

  • Before applying for loan for your new venture, it is important to assess the eligibility requirements set by banks.
  • In addition to the criteria mentioned earlier, having a good credit score is also crucial to qualify for a bank loan. Your bank may require you to achieve a specific score before approving your loan.
  • Furthermore, it is essential to pay off any past debts and liabilities while maintaining a healthy credit score.
  • The amount of loan you can get is the next thing to consider. This typically ranges from AED 50,000 to AED 7 million, but it may vary from one bank to another. It is up to the bank to decide the amount based on your business size, assets, repayment capacity, and other relevant factors.
  • The interest rate is another factor to inquire about. The applicable rate depends on various factors such as the loan amount, repayment tenure, etc. Your income, existing credit score, and collateral also significantly impact the interest rates.
  • Finally, think about the repayment tenure. This refers to the time period over which you will repay the loan amount along with the charged interest.

Concluding thoughts

Either you have a free zone company setup in UAEor a mainland setup business; to avail a business loan you must have a complete knowledge of your business requirements.

Please keep in mind that – when it  comes to business loans, there’s no one-size-fits-all  solution. Each loan carries its own set of risks, and the decision of which to choose isn’t always clear-cut. So, how do you make the right choice?

You have to evaluate the loan characteristics before submitting your application. By doing so, you will be prepared to tackle the application process with confidence, making it a smoother experience overall. Remember, being informed is the key to making the best decision for your business’s future.

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