UAE’s Two Leading Banks Open Door for Financing Access to SMEs

In a move that will give a major impetus to the ongoing efforts to further strengthen the ecosystem of small and medium-sized enterprises (SMEs) in the UAE and enhance their contribution to the country’s GDP, Emirates Development Bank and Emirates NBD have joined hands to offer a credit guarantee scheme to small businesses under an agreement.

What Is the Association About?

As per the memorandum of understanding (MoU) signed between the two banks, EDB will provide financing guarantee coverage of up to 50% of the facility amount being lent to SME customers by Emirates NBD. While larger SMEs will be eligible for a guarantee coverage of up to AED 5 million, smaller customers would get the facility for up to AED 500,000.

Who Will Benefit?

The credit guarantee program will help enhance lending to SMEs with a focus on priority sectors such as manufacturing, healthcare, infrastructure, food security, and technology.

“The MoU with Emirates NBD is part of our endeavor to support the country’s economic diversification plans and bridging the funding gap for SMEs operating in priority sectors in the UAE. In collaboration with Emirates NBD, we look forward to facilitating easy access to financial sources for SMEs, supporting the UAE’s goals to build a robust knowledge-based economy and contributing to sustainable economic development,” said Ahmed Mohamed Al Naqbi, Chief Executive Officer, EDB.

How Bright Are the Prospects?

According to the Ministry of Economy, the SMEs sector represents more than 94% of the total number of companies operating in the country and provides jobs to more than 86% of the private sector’s workforce. In Dubai alone, SMEs make up nearly 95% of all companies, employing 42% of the workforce and contributing around 40% to Dubai’s GDP. Though SMEs are making a significant contribution to the country’s economy, they continue to face difficulty in getting formal finance from the banking sector.

However, the MoU is in line with the EDB’s strategy to offer direct and indirect lending to SMEs for supply chain and project and long-term finance, and also to accelerators for equity finance and business growth.

Shayne Nelson, Group CEO of Emirates NBD, stated, “Emirates NBD has always championed the needs of homegrown SMEs that contribute to the UAE economy. Our newly-forged partnership with EDB is part of our long-term and strategic commitment to further the growth of small businesses in the UAE through appropriate measures. The MoU will help provide timely financial support to businesses and enable more entities to access credit easily for growth and expansion.”

Emirates NBD offers a comprehensive suite of banking services to SME customers, comprising transactional banking, cash management, funded and non-funded facilities, working capital financing, and other investment services. Customers can also avail of loans against POS receivables or properties where there is no requirement of audited financials.

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