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.
1. Standard business loan
2. Friends and family loans (F&F Loans)
3. Credit Card Loan
4. Small business Associations (SBA) backed loan.
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
2. Personal Liability
3. High Debt
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.
