Whether you are looking to fund an expansion or manage regular cash flow, banks in the UAE can offer you various business finance options with value-added benefits. These are some of the types of loans available in the UAE.
Collaterlised and collateral-free loans: While most lending institutions require businesses to offer collateral — tangible assets that business owners put up to secure finance — some banks in the UAE have now started to offer collateral-free business loans to help support the small and medium enterprise (SME) segment.
National Bank of Fujairah (NBF), for instance, offers a collateral-free financing arrangement that provides companies access to up to Dh1 million in funding. It also features flexible repayment terms and key man insurance. The loan is available to companies that are in business for three years, while those that are two years old and have the audited financials are eligible for up to Dh500,000.
With flexible repayment periods of up to 72 months, RAKBANK also offers collateral-free business loan of up to Dh3 million.
Working capital and trade finance: There are various forms of working capital financing available in the UAE, which can help businesses meet their day-to-day trading operations. The key categories of working capital financing are overdraft, lines of credit, short-term loans and factoring. Banks also offer attractive trade finance options for imports and exports.
The overdraft facility allows borrowers to withdraw funds beyond the available limit of their business banking account. Mashreq Bank’s Merchant Overdraft facility, an unsecured overdraft limit, gives businesses access to extra funding of up to Dh2 million.
Keeping in mind the working capital requirements of its customers, NBF recently launched a factoring facility, loans based on confirmed sales orders or account receivables, while its medium- to-long-term asset financing loans provide companies with the flexibility to boost productivity and capacity whenever they require. NBF also offers overdraft facilities.
Standard Chartered offers a complete range of financial solutions for SMEs including short-term loans for their trade and working capital requirements and long-term loans for capital expenditure. The bank also structures customised solutions that meet the specific needs of various SMEs.
Noor Trade, the business finance arm of Noor Bank, offers various short-term financing solutions to businesses such as invoice and post-dated cheque financing, supply chain financing against credit insurance, and trade financing for imports and exports. Its short-term import finance, mainly offered in conjunction with import letters of credits (LCs), helps businesses fulfil their payment obligation under a sight and usance documentary presentation. The import LC also allows time for the goods to be cleared, manufactured (in the case of raw materials) and stocked.
Noor Bank’s invoice finance product range offers immediate cash advances on unpaid invoices. These products are specially tailored for businesses that want to continue managing their credit control and sales ledger. Companies can benefit from improved cash flow with up to 90 per cent of invoice values paid upon the submission of invoice/related documents.