Dubai: Gulf Finance Corporation (Gulf Finance), an independent commercial lender to small and medium enterprise (SMEs) in the UAE and Saudi Arabia sees huge growth opportunities in financing smaller SMEs and micro business, said David Hunt, chief executive officer of Gulf Finance in an interview with Gulf News.
“We have had a very healthy growth in terms of assets and profitability year to date this year. We focus our business on small and micro businesses. Typically we are financing companies with very low turnovers starting from Dh1 million to up to Dh25 million and employs from 4 or 5 people up to 25 people and that strata forms core of our business,” said Hunt.
The company’s vision is to provide growth finance to entrepreneurs and small businesses and it wants to position itself as the preferred source of finance for SMEs.
“It is a very competitive market. Margins on SME business are higher than mainstream commercial lending business. A good number of banks are already into the SME market. The advantage we have is that we are small and nimble and our ability to turnaround loan applications within 24 to 48 hours us a preferred lender,” said Hunt.
Additionally, the customer profile of Gulf Finance is very different from that of banks. Banks face difficulty in lending to this segment because of the lack of financial accounting in these companies. Gulf Finance lends to these entities based on their bank statements and cash-flow records.
The company offers both unsecured and secured lending with most business loans falling in the unsecured category. But financing, vehicles and equipment are done on a secured basis and these are relatively cheaper compared to unsecured financing. In the secured lending, the company provides financing in the range of Dh50,000 to Dh400,000 on vehicles and equipment and in growth finance loans are extended in the range of Dh100,000 to 500,000 with the average loan ticket size of Dh250,000.
The company offers a range of loans and is specialised in asset based lending solutions, that provide clients with financing to buy assets such as inventory, machines or even pleasure boats.
Target market segments
Wholly owned by Shuaa Capital, Gulf Finance is headquartered in Dubai, with operations in Dubai, Abu Dhabi, and Sharjah. The company recently established its presence in Abu Dhabi’s industrial area, Mussaffah.
“Mussaffah is home to more than 65 per cent of Abu Dhabi’s SME market with well-established and start-up companies. Through our new office we will be able to provide new and existing clients with easier access to funding thus offering a better service to our target market segments,” said Hunt.
With the growing opportunities across the UAE boosted by huge infrastructure spending and large scale private and public sector spending on projects such as the Expo 2020, Hunt expects a trickle down impact on small and micro business boosting sustained demand for financing. In addition to its existing operations in Dubai, Sharjah and Abu Dhabi, the company has plans to expand into other emirates depending on demand.
Gulf Finance’s current book size exceeds Dh700 million and it is projected to grow in high double digits this year. Its associate company Gulf Installments Company (GIC) in Saudi Arabia launched in 2013 has a built a book Dh130 million in a short span of time.
“The economic environment in both the UAE and Saudi Arabia are encouraging with huge demand for financing from the SME and micro enterprises. We see double digit growth in financing and healthy profit growth in both these markets,” said Hunt.
The third quarter financials of the lending division Shuaa which consists of Gulf Finance and GIC posted revenues of Dh33.1 million compared to Dh28.4 million and a 150.5 per cent increase in net profit to Dh9.7 million compared Dh3.9 million in the same period last year.
