Dubai: A new locally-based lending platform, launched on Monday, is aiming to carve out a niche in financing small and medium sized enterprises (SMEs) through peer-to-peer lending.
Beehive, whose stakeholder include its Chairman, Rick Pudner, the former Group CEO of Emirates NBD, is an online lending platform that pitches itself as a new funding alternative for SMEs.
Peer-to-peer lending, which is based on crowd funding principles – where money is raised through a specific site from small to high investors, has taken off around the world including in the United States, United Kingdom and Australia. Beehive claims to be the region’s first peer-to-peer online lending platform.
“Timing is absolutely right for this in the United Arab Emirates and perhaps the wider Middle East,” Pudner said by phone on Monday.
In April, Abdul Baset Al Janahi, chief executive of Dubai SME, said there were 300,000 SMEs registered in the UAE.
The platform, which formally launched on Monday, following a soft launch 10 days ago, has already funded three SMEs and is set to conclude agreements with two more, Pudner said. Beehive has launched with 11 employees and is based out of Dubai.
The company’s founder and chief executive is Craig Moore, a founder and former chief operations officer of Butterfly Software, a data analytics and migration software company acquired by IBM in 2012.
SMEs in need of funding will have to be in business for at least two years before they can access funding using Beehive, meaning the website will not provide financing to start-ups. Companies will be able to seek investments between Dh100,000 and Dh500,000 over a period of up to three years.
Pudner said he expects high net worth individuals to invest in SMEs through the website; however, individual investors can invest from as little as Dh100.
Beehive takes a percentage fee of the loan amount from the SME, which varies depending on the term the loan is spread over, while the investor is able to choose how much they lend and at what interest rate.
Pudner, who declined to divulge the website’s start-up capital, said Beehive is a “more efficient” way of allocating resources and obtaining “more aggressive” pricing on loans.
However, Pudner said, he does not expect the platform to compete with the big banks, instead, he said, Beehive will add to the mix as SMEs look to diversify their financing.
“[It is an] more alternative channel for SMEs who have found it difficult in the past to obtain financing,” he said.
Beehive launched this week targeting UAE SMEs, however, Pudner said there are plans to expand the concept to the region as well as launch a Sharia-compliant version.