SMJ Rethink https://smjrethink.com Audit, Accounting & Tax Services Sat, 07 Sep 2024 11:22:45 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://smjrethink.com/wp-content/uploads/2024/09/cropped-smj-fav-32x32.png SMJ Rethink https://smjrethink.com 32 32 How to Easily Apply for a Business Loan in UAE in 2024 https://smjrethink.com/how-to-easily-apply-for-a-business-loan-in-dubai-in-2024/ https://smjrethink.com/how-to-easily-apply-for-a-business-loan-in-dubai-in-2024/#respond Tue, 03 Sep 2024 07:38:35 +0000 https://smjrethink.com/?p=2411

UAE is a dream marketplace to build a new start-up due to its efficient business environment and business-friendly tax policies. But to start any business in Dubai, first, you need some investment or funds to raise primary capital. Getting a loan from someone is a great way to gather initial funding.

If you want a sufficient amount to start your new business, you can choose different options to apply for various business loans. This article will guide you through top tips for applying for a business loan in Dubai and the benefits of each business loan, including four critical types of loans.

Apply for a Business Loan in UAE

To acquire a loan in Dubai, you apply to higher authorities, Banks, and other loan funding organizations. 
You have to apply for a business loan in Dubai with a step-by-step procedure. Otherwise, you will end up with the need for more required documents. That might lead you to high waste time, ruin your plans and screw your business schedule.

Here is a step-by-step guide to applying for a small business loan in Dubai.

1. Check your eligibility for a loan in UAE.

Many small businesses in Dubai are eligible for loans, and your business might qualify for one too. Here are the eligibility criteria. Compare it with your business details, and if they match, proceed to the next step. 
Your business age must be at least two years old. It means you have had a registered business in Dubai for the past two years.
Your business per anum turnover must be at least AED 1 million (depending on bank/loan funding organizations).
Bank statement of your business for the last 6 – 12 months.
If your business fulfills the criteria mentioned above, complete the next step.

2. Choose the correct type of loan.

To apply for a business loan in Dubai, you must pick the right kind of loan for your business. There are four different types of loans in Dubai for a small businesses. These four types are described below.

1. Standard business loan

This type of loan is a bit strict compared to others as it is strictly for business purposes. You have to repay a fixed monthly installment over an extended period. Another is that it typically has set payment terms unless the loan is under a variable rate.

2. Friends and family loans (F&F Loans)

You can directly approach your friends and family for the desired amount. You can achieve the goal of flexible payment terms when you acquire this kind of loan. On the other hand, you can lose your relationship or friendship if repayment goes the wrong way. You need to be wise when choosing this type of loan.

3. Credit Card Loan

You can get an advance payment from banks through credit cards. Most banks charge high-interest rates. If you are not good in revenue in the initial stage of your business, you may end up in debt.

4. Small business Associations (SBA) backed loan.

This loan is supported or backed by the government of Dubai. You could go for this type if your bank loan applications got rejected. But the worst side is that the government will impose harsh penalties on your business if you do not meet the payment terms.

3. Familiarise With the Concept of Islamic Finance in Dubai

Islamic Finance indicates all the financial ventures and investments adaptable to Sharia, which is the term for Islamic Law. Before applying for a loan in Dubai, you must be familiar with these. A few of the essential rules ate listed here;

  • You cannot earn interest through lending or borrowing money; it is forbidden.
  • You must make money earned through legitimate trade and investment of assets.
  • Your money must be spent in productive ways.

After considering all the above points, let’s move to the next one.

4. Prepare the correct documentation.

Suppose you prepare all your documents to Apply for a Business Loan in Dubai. It will ease and fast your next step in the procedure.  
Here are the few primary business documents that the bank requires to apply for a business loan in Dubai:

  • past 6-12 months Bank statements
  • Bank application fulfilled form.
  • Association document / Power of Attorney of your business / Agreement document for partnership;
  • Your original trade license for verification;
  • Your passport copy (the one who apply for a business loan in Dubai).

Besides these essential documents listed above, some banks usually require additional documents. There should be with you as well:

  • Your Home Residence Tenancy Contract or your Sharing Accommodation Letter
  • Transaction invoices (should be high volume)
  • VAT Certificate
  • Financial Audit statements / Reports
  • List of employees provided by the Ministry of Labor
  • Your business Trade License

5. Final step

Visit any of your nearest bank branches, which have the facility to give you a loan for business in Dubai. Ask for their terms and conditions, minimum time to get access to your loan, range of business loans, repayment methods, repayment time, monthly repayment amount, and most importantly, their interest rate.

If you feel satisfied with their methods and conditions, fill out their application form. Attach all of the required documents and submit your application to the manager.

They will let you know the time taken to process your amount; wait for that time. And yeah, your loan is delivered to your business account.

Benefits, if you'll apply for a business loan in UAE

  • No security requirements: free and easy access to finance with rock-bottom formalities.
  • Best and fair pricing, with a commitment to maintaining fees and profit rates amongst the lowest in the market.
  • Fast decision-making and processing turn-around times, with most credit decisions made within 48 hours.
  • Transparency; Clear and straightforward terms, conditions, and eligibility requirements.
  • Convenience; All installments will be automatically debited from your business bank account.
  • Flexible repayment tenure; Choice of repayment periods between 12 and 48 months.
  • Loan top-up facility after 12 months of satisfactory loan performance.
  • Buy-out option; you can take help to transfer your existing loans and credit facilities from another bank.
  • No requirement to submit audited annual statements.

Risk involved in business loans in UAE

1. Credit Score

If you rely on debt financing too much in Dubai can help your personal or business credit score if you make timely payments. But if you will not be able to make timely returns, it will hit your reputations in Dubai and might affect you, when you will try to apply for a business loan in Dubai other time.

2. Personal Liability

If your company goes out of business, before it can pay its debts, you may be left with a personal financial load that may take years to settle and may even result in personal bankruptcy. Finance grows slowly in the first few years of operations to prevent acquiring too much debt before your company model sustains your operations.

3. High Debt

Occasionally, your company will discover that you can acquire many loans simultaneously or over time. Just because your company can do so does not imply it should. If you secure a loan and then borrow more before the initial loan is returned, it could indicate that your company is experiencing significant financial difficulties.

4. Interest Rate Volatility

Depending on the type of business loan, you may be required to repay the principal and interest. A fixed-rate loan means your company will pay a fixed amount in interest over the loan’s tenure.

Each type of business loan in Dubai has its threat. Therefore, there are no exact right or wrong choices.  Evaluating what loan features you prioritize more is crucial, which will help your business succeed. Being aware and prepared for the application process before apply for a business loan in Dubai can make the process much simple and more sophisticated.

FAQs

Many banks give business loans easily in Dubai, such as:

  • ADCB 
  • Emirates NBD 
  • Mashreq Bank 
  • Rak Bank and more

Yes, applying for a business loan in Dubai is a smooth process. But sometimes, the process looks complex. Banks in Dubai demand to meet the set of companies’ requirements to approve a loan.

]]> https://smjrethink.com/how-to-easily-apply-for-a-business-loan-in-dubai-in-2024/feed/ 0 What is an Offshore Company in UAE? https://smjrethink.com/what-is-an-offshore-company-in-dubai-uae/ https://smjrethink.com/what-is-an-offshore-company-in-dubai-uae/#respond Tue, 03 Sep 2024 07:34:47 +0000 https://smjrethink.com/?p=2401
This article will give you every bit of crucial information you need to establish an offshore company in Dubai and the UAE as a whole. It will also inform you about the types of businesses that cannot be set up as offshore businesses. It will provide a list of documents needed to register an offshore company and lastly whether a business owner should hire an agency to assist in the incorporation process. Let’s start with the most basic question:

What is an offshore company in UAE?

An offshore company is any company/corporation/firm that is established on one land but operates on another. This is mainly done to avoid taxes on the profits that it is making.  The hard-earned profit that businesses can spend on the expansion of the business is excessively taxed which discourages business investment. Not establishing an offshore company in Dubai could be a catastrophic decision for an expanding business.

There are innumerable places to open offshore companies. But incorporating your business in Dubai has its merits. These are 6 irresistible reasons to incorporate your offshore company in Dubai.

  • No outrageous corporate taxes.
  • Captivating Political stability.
  • The financial hub of the world: businesses get close to their trading partners.
  • One of the most popular business establishments in Dubai.
  • The best system for wealth management, international investment management, and freedom of operations.
  • Privacy and anonymity.

Why is UAE the most Inspiring place to form an offshore business?

Dubai is named in the same league as Frankfurt, London, Hong Kong, and New York.  It provides all the benefits of tax havens without the bitter nuances of other tax havens. It is a place that does not penalize a business that is performing well by taxing its profits.

In Dubai, a business does not generate more sales and profits merely to be doubled-taxed; neither is privacy compromised by publishing corporate reports. In fact, you hardly pay any tax and get known.

It is also the financial hub of the world where business owners get to manage their wealth and investments with ease of setup, anonymity, and privacy. In other words, business owners set up their business in a real tax haven-freeing a deserving investor indulges in profit-making without any guilt. 

Before a business is established as an offshore company in Dubai, the owner should be clear about the type of businesses that can be incorporated in Dubai.

Common types of businesses that can be established in UAE

Below is a list of common business types that are commonly formed in Dubai:
  • Intellectual property(IP) holding Companies
  • Shipping firms
  • General trading firms
  • Online advertising companies
  • Distribution firms
  • Logistics firms
  • General trading companies
  • Professional consulting services
  • Different types of brokers
  • Real estate holding firms

What offshore companies in dubai cannot do?

Given above are the types of businesses that can be registered as offshore companies. But even though these types are legal offshore firms, there are two activities that they cannot perform, given below:

  1. Trade inside UAE
  2. Employee people

Businesses that cannot be incorporated as an offshore company in dubai

Next, we provide a short list of the main types of businesses that cannot be incorporated as offshore businesses;

  1. Aviation
  2. Media
  3. Insurance
Note: Once an application for the offshore company is submitted, all business types go through the Know Your Customer(KYC) check. It is to ensure that the activities performed under a business are legal.

Unbelievable benefits of offshore company formation is Dubai

  • 100% ownership
  • Offshore companies don’t pay
  • Corporate tax
  • Income tax
  • Inheritance tax
  • Property tax
  • Personal tax
  • Bank account
  • Companies can open UAE bank accounts and hold multiple currencies.
  • International expansion: offshore companies may expand to other countries.
  • Stable political, economic and social base.
  • UAE offers one of the most stable Socio-political environments where law rules.
  • Privacy
  • An offshore company cannot be audited.
  • Access to funding
  • Being in the financial hub of the world gives business creditworthiness and Good credit ratings to obtain financial funds for its operations abroad.
  • Access to solvent foreign banks
  • Businesses banned other places
  • A business that is banned in other countries can run its office in Dubai.
  • Help in IPO( initial public offerings)
  • Hold intellectual property and real estate.
These are some of the compelling examples of the benefits an offshore company enjoys.

Documents required to register an offshore company in Dubai

  • Business plan (ideal is 3 years but not a must have).
  • 6-month Bank statement or original bank reference letter.
  • CV of shareholders
  • Passport copies of shareholders
  • Your address( the one on utility bills will do)
  • 3 options for business name complying with business naming rules
  • Description of your company operations

A straightforward guide to the registration process

Given below are the main steps a business owner must take to register an offshore company in Dubai.
  • Choose a name
  • Fill applicating
  • Draft of MOA(memorandum of association) and AOA(Article of Association)
  • Open an onshore bank account
  • And follow the rules.
  • And put aside around AED 12,500 to register an offshore company in Dubai

Hiring an agency?

Although the UAE law is clearly stated and the laws rule in the UAE, the legal system can be tricky to understand. What at first seems like a simple process may become a nightmare for a business owner easily turning fantasy into horror. A small mistake may result in the rejection of your application. Therefore, it is advisable that a business owner hire a Dubai offshore company formation agency to guide on every step of the process. Still, an entrepreneur may incorporate an offshore company if he or she is skilled in the company formation process.

Capital Plus Auditing can partner up with you to handle all your offshore company formation tasks. Click the button below to schedule a free meeting to get our Offshore Company Formation Services in Dubai and UAE.

]]> https://smjrethink.com/what-is-an-offshore-company-in-dubai-uae/feed/ 0 Useful Tips to Reduce Operational Cost of Business in UAE 2024 https://smjrethink.com/useful-tips-to-reduce-operational-cost-of-business-in-uae-2024/ https://smjrethink.com/useful-tips-to-reduce-operational-cost-of-business-in-uae-2024/#respond Tue, 03 Sep 2024 07:16:44 +0000 https://smjrethink.com/?p=2370

Low cost is not something that enters one’s mind when he thinks about establishing a business in UAE because the skyscrapers, explicit architecture, and living standards in Dubai send a completely opposite message. However, UAE is not only a glimmer and big budget. There are different proven strategies that can help you reduce your business’s operational costs, if implemented in the right way. Dubai, in a very short period of time has become a center of attraction for starting up businesses because of its countless opportunities for new companies to grow and establish their setups in the market. Any company aiming to establish in the UAE surely has a vision and strategic plans because running a business there has never been a piece of cake, especially in a place like Dubai. Here are some possible effective ways that you can adopt to run your business with reducing Costs of Operation.

Experience Growth by reducing operational cost of your business in UAE

Follow the techniques given below to reduce operational costs and daily expenses of a business.

Look out for free zones:

Free zones can be a home for low cost business setup because of its affordable license policies, visa costs, tax exemption etc. Running a business needs space for an office which requires a good amount of budget that becomes a problem for low cost buisnesses but in the free zones you do not have to worry about the expenses. 

To reduce the operational cost of business in UAE, free zones are benefiting from 0% tax exemption, the ability to spread their business in all other states and zero currency restrictions.

Some of the free zones are:

  • Dubai 1 Central
  • Dubai Media City
  • Dubai Airport Free Zone

Promote remote working:

Digital revolution has been transforming the conventional ways of running a business. It has provided easy and quick ways to communicate and operate that can help to reduce the business operational cost. 

With the shrinking of hardware technology there is no longer need for a large infrastructure for offices where you have to invest on a large scale.

The implementation of cloud based technology provides you with so many options that give you the power to access the company systems via a variety of devices, conduct meetings, sell and advertise your products, search for different ideas from other established firms and companies.

Pros of remote working

  • Increase autonomy
  • Cost saving
  • Save time and infrastructure

Cons of remote working

  • Difficult to stay motivated
  • Sedentary lifestyle
  • Management challenges

Reduce supply expenses:

If you are about to start a business in dubai with low operational costs, always look for alternatives. Do not spend too much at once on the supply expenses- be this your office stationary or manufacturing, always look for a better deal somewhere that will help you to reduce the operational cost for business in UAE.

Switch to modern tools and find your niche:

You do not need to travel in order to attend a meeting with your business partners, that surely is not going  to reduce your operational costs for business in UAE.

You can now have a detailed conversation, discuss ideas and projects with many people at once just by getting your hold on the modern tools such as zoom and skype meeting. You can also explore and learn different strategies of many successful entrepreneurs just by one click that in turn can help you focus on your business goal more efficiently.

Hire an accountant:

An accountant is a person who sorts out all your financial planning that is needed to run your setup. From planning a business to the formation of the company, and from government audits to paying taxes,it is only a qualified accountant who can handle these things professionally. So hiring an accountant can run up your firm smoothly and can help you to reduce the operational cost for business in UAE by consuming time and keeping the company safe from any major loss.

Hire interns:

Hiring interns at the beginning of your setup is another useful strategy to reduce the operational cost of business in UAE. 

FAQs

Never compromise on your product quality, use modern advertisement strategies, get in touch with already established firms.

With growing business revenues also increases, so it is important to maximize your profit by keeping a strict eye on your business operational costs. For a business to grow, the foremost concern is to control the budget by making weekly or monthly plans and follow them strictly.
  • Improve demand forecasting
  • Re evaluate your assets
  • Find less expensive suppliers 
  • Outsource some of your company tasks

Advertising through social media platforms can help you to gain more audience at lower cost as compared to the old outdated advertisement ways which are costly and time consuming. Modern marketing strategies can reduce the operational cost of business in UAE.

  • having sales with negligible profits
  • Investing too much in the office infrastructur
  • Hiring more staff more than the requirement
  • poor management of revenue
  • Investing too much on advertisement while selling compromised
  • Quality in the market
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