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How to Get Finance for your Business in UAE

Unless you receive money, you will frequently establish a business that you will be unable to scale rapidly. You may require funds for your IT project, which you must actively market online in order to attract customers; this also applies to projects that involve the construction of complicated infrastructures (for example, clean energy and waste disposal projects), as well as projects in other industries. In general, there are numerous methods for raising funds that are commonly used in the UAE.

Guide to Get Finance for your Business

The first and most straightforward option is to form a partnership with businessmen you already know and who have their own capital to invest, in exchange for your skills and professional knowledge. Perhaps you will also make a cash contribution.

The second step is to participate in investor pitches for your project. Every year, a number of events are held across Dubai to give young entrepreneurs the opportunity to promote their businesses. While you may not yet have a business but have amazing ideas in the example we just outlined, in order to propose a project to investors, you must have a functional business and, more significantly, a business that is readily scalable. Investors will assess not just the idea and scalability of the project, but also how quickly you grow, and they will want to know the numbers and examine your growth trajectory.

Angel investors, as they are known, are especially interested in IT ventures because it is an industry that is rapidly growing.

This is a proposal you will have a hard time pitching if you want to create a more traditional business, such as trading food supplies. If you have no prior business expertise, we generally do not advise you to begin with funding. Before you begin looking for investments, you must first learn the ropes. As previously said, traditional businesses are difficult to pitch to investors until some know-how is introduced. As a result, most business owners in the UAE seek funding from local banks.

How to Get Finance for your Business from Banks?

Initially, entrepreneurs seek out banks that offer bank loans to startups and small to medium-sized businesses. Currently, Emirates NBD, ADCB, and RAK Bank are a few banks that offer SMEs and Startups business loans. Keep in mind that you may wish to conduct your own research on multiple institutions, examining essential elements like interest rates, collateral, and even repayment terms. This will allow you to select the bank that best meets your company's requirements.

It is a well-known fact that securing a bank loan for a small business or startup in the UAE can be quite tough. You should also be aware that most start-ups fail within the first few years, thus banks would be taking a tremendous risk by accepting start-up applications. As a result, before applying for any bank funding for your business, you must have several years of successful operations behind you, a strong credit history, a certain turnover, and demonstrate how you will repay the loan.

The second important question is what the banks are searching for when they assess your application. In the UAE, there is no such thing as a rule of thumb. Every bank is unique, and it varies even more depending on the company's industry.

In the United Arab Emirates, there are five options for obtaining company capital.

  • Angel Investors,
  • Venture Capitalists,
  • Institutional Investors,
  • Company Incubators
  • Local Fundraising and Outreach programs

 Let's take a closer look at each of these funding alternatives.

Funding and outreach programs on a local level

Here are some of the examples of local fundraising and outreach programs: -

Local financing and outreach programs, such as:

The Khalifa Fund for Enterprise Development is a non-profit organization that aims to help small businesses grow.

H. H. Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE and Ruler of Abu Dhabi, announced the foundation of the Khalifa Fund for Enterprise Development (KFED) in 2007, which provides accessible financing solutions to local investors, entrepreneurs, and SMEs in the country. The Fund's purpose is to encourage entrepreneurship and investment in the UAE, as well as develop innovation and finance viable and creative company ideas that have a positive influence on the national economy in several areas. The KFED Programs are organized into two categories: funding programs (such as microfinance, Khutwa, Bedaya, Zeyada, Tasnea, Zaarie, and Al Hasela) and outreach programs (such as Al Radda, Ishraq, Sougha, and Amal), which target certain groups.

SME in Dubai

Dubai SME is a Department of Economic Development entity that provides finance and other support services to start-ups and established SMEs.

Angel investors

According to Forbes Magazine, "angel investors" are "high-net-worth individuals, entrepreneurs, and families that invest in early-stage or startup companies in exchange for an equity ownership interest."

This is one of the quickest ways to receive funding because it usually requires less documentation and a simpler funding process.

Finding the proper angel investor, on the other hand, is difficult since it takes in-depth knowledge of reputable angel investors in the UAE, or at the very least, a local partner with sufficient resources to search for and communicate with such investors

Venture Capitalist

Another possible source of finance for your small business is venture capitalists (VC). These are private equity investors that are willing to put up substantial sums of money despite high risks since they stand to benefit a lot if the companies, they back succeed in launching and maintaining their operations.

Having angel investors on board is equivalent to having this form of finance. When they have a local partner, agent, or business setup consultancy representing them, most entrepreneurs feel more confidence in partnering with venture capitalists.

VentureSouq, which invests in high-growth early-stage digital firms; Shorooq Partners, a renowned seed stage venture capital fund; and BECO Capital, an early-stage venture capital firm, are among the most active venture capital investors in the UAE.

Institutional Investors

Obtaining a loan from local institutional investors to start a business in Dubai or anyplace else in the UAE is also an option. Institutional investors are businesses that have access to other people's money and invest it in a wide range of initiatives.

Although banks are the most well-known institutional investors, other firms such as insurance companies and mutual funds also offer business financing.

Entrepreneurial Incubators

Business incubators are non-profit organizations that provide full-service support to entrepreneurs, including everything from market positioning and launch to marketing and funding. Astrolabs, the Dubai Technology Entrepreneur Centre (DTEC), In5, FinTech Hive, Turn8, and Techstars Dubai are just a few of the UAE's top business incubators.

New Options Available for Funding in UAE

So far, we've covered all of the choices for funding your business. However, there is one more option that is relatively new to the UAE: crowdfunding. Previously, there were no restrictions in place in Dubai for crowdfunding. In the Dubai International Financial Center, the Dubai Financial Services Authority (DFSA) recently issued new guidelines addressing crowdfunding (DIFC). The rules are in place to assist small, medium, and startup firms in using crowdsourcing to raise capital. The new system was put in place to help the UAE's SME sector grow and to foster long-term development. The first international crowdfunding platform just joined DIFC and was granted the necessary license.

Conclusion

As a result, the following conclusions can be drawn from this chapter. There are a variety of ways to fund your new or current business. Regardless of which option you choose, we strongly advise you to get legal and financial advice and Dhanguard is one of the best options that you have for such matters. Dhanguard will help you to Get Finance for your Business as your firm successfully grows and expands, is always a smart idea.

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Frequently Asked Questions

The bank of UAE provides flexible repayment option that can range from one to four years.

Yes, the application for loan can be rejected if the applicant has not provided the reason for such loan with proper documentation.

No, your application for loan will be rejected if you apply for Multiple Loan.

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