The new scheme will boost SMEs’ business activities and pave way for economic diversity. Image Credit: Rawpixel on Unsplash

Dubai: Emirates Development Bank (EDB) on Monday launched a Dh100 million credit guarantee scheme for small and medium enterprises (SMEs) in the UAE.

The new scheme, according to EDB, aims to boost SMEs’ business activities and pave way for economic diversity in line with the UAE’s move towards a post-oil economy.

“The Credit Guarantee Scheme is part of EDB’s commitment to support the goals of the National Agenda under UAE Vision 2021, focused on boosting SMEs’ GDP contribution to reach 70 per cent by 202,” the bank said in a statement.

The scheme will provide strategic financing solutions to the SME ecosystem in the UAE. EDB provides credit guarantee to partner banks in the UAE that can offer up to Dh2 million financing to start-ups where EDB guarantees their loan up to 85 per cent, and up to Dh5 million financing to existing SMEs where EDB also guarantees up to 70 per cent of their loan.

“The launch of the first phase of the scheme dedicated to SMEs is in line with EDB’s commitment to create and offer an integrated portfolio of innovative financing products and solutions that will enhance SMEs’ access to capital, recognising that the sector is one of the major growth drivers of the national economy, which will boost the UAE’s ranking in global competitiveness,” Obaid Humaid Al Tayer, Minister of State for Financial Affairs and Chairman of Emirates Development Bank, said in a statement.

The scheme provides a solid platform for emerging national companies and entrepreneurs to explore new opportunities through innovation such as smart industries, which serve the country’s efforts of building a knowledge-based economy and contribute to sustainable economic development.

Emirates Development Bank has signed agreements with several leading banks in the UAE, including Commercial Bank of Dubai, RAKBANK, Mashreq Bank, Al Masraf, National Bank of Fujairah, and Commercial Bank International.

EDB plans to further expand their partnership portfolio by signing with additional banks as part of the bank’s commitment towards backing up the SME ecosystem to support.

“The launch of the new guarantee scheme to boost bank financing for SMEs is one of the most important outcomes of those initiatives, which has been the result of the cooperation between the Federation, represented by the SMEs Financing Committee, and Emirates Development Bank,” said Abdul Aziz Al Ghurair, chairman of the UAE Banks Federation.