Business Loan in the UAE

What is the prescribed Eligibility Criteria for a Business Loan in the UAE?

Ask your bank what requirements you must fulfill in order to be eligible for a business loan in the UAE. The requirements could differ from bank to bank. 

We have mentioned the most general criteria of any bank below-

Income 

Your company must have been operational for at least a year.

Operation 

If your company is a subsidiary or branch of an overseas operating organization, getting a business loan should be simple.

Turnover

In order to be eligible for a business loan, your yearly turnover must be at least 1 million AED.

Age Requirement

There is a 21 year old minimum age requirement for applicants.

Owning a Business Account

You need to have a business account with a bank in the United Arab Emirates.

Different sorts of business loans are available from banks and other financial organizations for various kinds of enterprises. A company loan might have an amortization period of one to four years.

How to get a Business Loan in Dubai?

Dubai is a great place to start a new company because of its favorable tax policies and ease of doing business. You have the option to apply for numerous business loans if you need to raise enough money to finance your new company. A crucial first step in successfully launching a business in Dubai and ensuring its existence is securing this capital.

Therefore we have mentioned our top tips for applying for a business loan in Dubai-

Determine Your Eligibility to Apply for a Business Loan

The qualifying requirements must be met in order for many small enterprises to be eligible for a business loan. From bank to bank in the UAE, the specific requirements vary. But these minimal conditions apply to all banks:

• The company has to have been in operation for at least one year.

• The yearly minimum turnover (amount varies per bank)

• The recent six to twelve month business or personal bank statements

Make The Proper Loan Selection for your Business

Different sorts and amounts of company loans are something you might take into consideration. The advantages of four major categories of business loans are described below:

Small Business Association (SBA) Backed Loan

• When your applications for bank loans have been denied, this is a viable choice.

• It is supported by the government of UAE

• Government officials have the right to levy severe fines if payment terms are not adhered to.

Standard Business Loan

• It is a kind of regular business loan in which fixed monthly payments are made over a long period of time, 

• Unless the loan is subject to a variable rate, payment periods are usually fixed.

Read more on Islamic finance in Dubai and become familiar with the Concept

Islamic finance covers all financial transactions and investments that adhere to Sharia, or Islamic law. Islamic finance is based on a number of fundamental concepts, some of which are as follows:

• Money must be made through ethical business dealings and asset investments.

• Money must be used productively.

• It is illegal to lend or borrow money in order to gain interest.

What Distinctions exist between Traditional Finance and Islamic Finance?

Islamic Finance consequently follows the idea of profit and loss sharing under a contract because interest is forbidden by Islamic Law. Although there are numerous distinct kinds of contracts, the mudarabah is one of the most popular. The earnings and losses will be allocated between the investor and the entrepreneur in accordance with this contract, which is very specific about it. The responsibility for all losses will also fall on the investor. The entrepreneur must pay interest regardless of the company's financial situation, according to conventional finance, which is the opposite of this.

Prepare all the Relevant Documents

By having the documents required for a business loan ready in advance, the application process can be sped up.

In order to process a loan request for a business in UAE, banks often need the following documents:

• The bank records from the previous six to twelve months

• A filled out bank application

• a partnership agreement, a power of attorney, a memorandum of association, or other similar document

• For the purpose of validation, you must submit a copy of your trade license together with the genuine document

• The Passport photocopy for loan applicant

The following extra documents, which you should also have on hand, are frequently requested by banks in addition to the ones stated above, and are therefore vital to have on hand:

• Audit Report

• A list of employees from the Ministry of Labour

• Bill of Lading (if applicable)

• Trade License

• Tenancy Agreement for Owners' Home or Letter of Accommodation for Sharing

• High Volume Transaction bills

• Certificate for VAT

What can you do to enhance your Eligibility for a Business Loan in UAE?

You can increase your eligibility for business loans by taking the following few easy steps which are mentioned below-

Limit the number of loans you take out at once

To qualify for a company loan, first evaluate your financial needs. A further recommendation is to avoid submitting several loan applications as this can harm your creditworthiness.

Credit Score

Make careful to keep your credit score at or above 750. It makes it easier to quickly approve a business loan.

Go with a longer repayment term

A longer loan repayment period is something you should try to choose. It will enable you to comfortably repay your business loan over time. The lower installment amount that results from selecting a longer repayment term is another benefit.

Pay Off Old Debts

Try to pay off any outstanding debts you have, including loans, credit card balances, and other responsibilities. And be sure to make timely payments on all of your installments. You can improve your eligibility for a company loan by doing this, since it will help you establish a pristine repayment history.