Dubai is considered as one of the leading business hub attracting entrepreneurs to thrive with their financial support. Business loans in Dubai are very pivotal for startups and small businesses to flourish. This article will cover all aspects of business loan in Dubai including interest rate, types of business loans, eligibility benchmarks, documents required, successful business loan applications, and common mistakes to avoid while applying.

Basic Understanding of a Business Loan in Dubai

In the international market of Dubai businesses are continuously striving to level up them to the top. To grow up one must need everything like new technology, affiliations and reliable gateways for import & export. Business loans in UAE help entrepreneurs and small enterprises to fulfill their financial needs. The World Bank has ranked UAE at the 16th position out of 190 countries for ease of doing business. A business loan is basically intended for business purposes to fulfill financial demands of enterprises and will be rapid with add on interest.

Why Select Dubai for Obtaining a Business Loan?

Why select Dubai for obtaining a business loan?

Business loan in Dubai have importance due to its strategic location, global business hub and tax friendly environment. All these measures attract entrepreneurs worldwide to get business loan for a new company in Dubai. Following points highlights why one should select Dubai for obtaining a business loan:

Tax Friendly Environment

Dubai is considered as one of the global business hub due to its tax friendly policies. It offers 0% tax rate on personal income and a relatively low tax rate for other businesses.

Approach to International Markets

Dubai’s excessive imports and exports make it approachable to other markets. Access to other international markets through air and sea also attract entrepreneurs to claim business loan in dubai.

Government Supported Initiatives

The Government of Dubai supports small startup enterprises and companies through their friendly policies. Government backed initiatives attract entrepreneurs to secure business loans in UAE.

Different Types of Business Loan in Dubai

  • Term loans: Term loans referred to as a fixed amount taken for a set period with a pre-planned interest rate. These loans are either for a short term or long term. Term loans are suitable for long term investments like expansion of office, machinery purchase or for big projects.
  • Small Business Loan: Small business loans in UAE are best for small startups and SMEs that require small funds in order to fulfill their financial needs. With quick approvals to flexible repayment plans, small business loan in Dubai help startup companies to thrive.
  • Trade finance: Trade finance loans are specifically designed for import and export to assist businesses to manage their trade negotiations smoothly.
  • Startup loans: Startup loans map out for new companies to support in their initial business journey. It covers all the beginning steps including marketing, office setup and purchase. Entrepreneurs seek business loan for new company in dubai to kickstart their business.
  • Bank loans: Most of the conventional banks in Dubai offer loans to the already established companies looking for more capital. These bank loans come up with competitive interest rates and certain repayment plans.

Various Characteristics of Business Loan

As a business owner while securing your business loan in Dubai you must have awareness. Following points highlights various features of business loans in UAE:

  • Goal oriented funding: These are basically designed to fulfill various goal-oriented business needs such as office expansion, machinery purchase, working on capital and other operational costs.
  • Short or long term tenure: Depending upon loan type repayment structures can range from short term to long term covering a few months to several years.
  • Repayment order: Repayment orders for these loans are monthly to quarterly installments with a fixed schedule.
  • Collateral need: Most of the banks do not need collateral for loans and provide unsecured loans. While some need assets as a collateral but you need to confirm before applying for your business loan.
  • Loan amount: Some banks require a minimum balance to make a business loan. The amount of business loan in Dubai ranges from 100,000 to 2 million AED.

Advantages of having a Business Loan in Dubai

Advantages of having a business loan in dubai

Business loans in UAE have their multiple key benefits with a major aim to help businesses thrive in their long run. It provide following benefits to enterprises:

  • Business expansion without losing your personal assets
  • Better cash flow to handle your day to day expenses and to fulfill your financial needs
  • To enhance your business growth with future financing solutions and credit building
  • Supporting your small startup businesses with increased financial growth

Eligibility Benchmarks for Business Loan in UAE

Different banks have their own eligibility benchmarks that must be met separately. Generally to secure your business loan in dubai you must meet following requirements:

  • The minimum operation time period for a company must be 1-2 years.
  • The minimum annual revenue of AED 1 million is required
  • You need a valid trade license
  • Bank account statements is required for the previous 6-12 months
  • Maintenance of a proper corporate bank account
  • Age limit is also applied one must being at least 21 years
  • Offshore companies, LLC, Partners with sole landowner and Offshore organizations are some of the qualified entities which can easily qualify for business loan in dubai.

How to Appeal for a Business Loan

If you are confused about how to apply for a business loan Almas Financial Services helps you in this regard. The overall process becomes much easier with us here are some steps to follow:

  • Approach your financial needs: First you need to confront your financial needs that how much loan is required and for what purpose. 
  • Select the right loan type according to your need:Whether you need a term loan, bank loan, trade finance loan or small business loan in UAE recognize your need first and then take the right decision.
  • Complete documentation: Prepare all of your documents, trade license, bank statement, business plan and other financial reports.
  • Submit your loan application: Submit your loan application with the selected banker, ensure all the documents and information you provided is correct.
  • Acceptance and payment: Once your loan is approved carefully read all the terms & conditions. Accept the loan offer, the funds will be paid and the repayment conditions are set.

Essential Documents Required for a Business loan in Dubai

Essential Documents Required for a Business loan in Dubai​

The process of acquiring business loan in UAE can be made easy by preparing all the required documents in time. If you have legalized and original documents the business loan application process becomes easier. While applying business loan for new company in Dubai following documents typically require:

  • Trade license: Lenders require a trade license in order to ensure that your company is legally registered in the UAE.
  • Copy of the passport: The loan applicant (business owner) and legitimate signatories passport copy is needed.
  • Emirates ID copy: For UAE residents and non residents the Emirates ID copy is necessary for the proof.
  • Copy of your residence visa: If applicable copy of your residence visa is required
  • Bank statement: In order to secure business loan in dubai you need a bank statement for the last 6-12 months to show financial stability.
  • Audit report: Report on audit is necessarily required balance sheet with profit and loss statements.
  • Business plan: For startup companies a business plan is needed.
  • MOA: Memorandum of association is typically needed to verify ownership and structure of a company.
  • VAT certificate: VAT registration certificate is required in order to see if your business is VAT registered or not.
  • Employee list: The list received from the ministry of labour also submitted.

Number of Banks Providing Business Loan in Dubai

There are a number of banks in dubai which gradually provide loans for different business types. The major one are as follows:

  • Abu Dhabi commercial bank (ADCB): Providing collateral free loans for equipment and property financing.
  • RAKBANK: Giving real estate loans and other commercial financing solutions.
  • Emirates NBD: Vehicles and other machinery loans real estate financing, commodity and project financing.
  • Mashreq Bank: Almas financial services is an official channel partner with Mashreq neo biz, a digital business banking platform providing business bank accounts and small business loan in UAE.

Key Factors Affecting Business loan Interest Rate in Dubai

  • Loan type: Secured loans generally have low interest rate while unsecured loans have high interest rate due to no collateral.
  • Loan amount: Larger loan amount having low interest rate while smaller loan have competitively high interest rate.
  • Business type: Established businesses get better rates as compared to startup enterprises because of high risk.
  • Government strategies: Government friendly schemes also attract entrepreneurs with SMEs support programs.
  • Different market conditions: Banks change their policies according to different market conditions and it also affects interest rates for companies securing a business loan in dubai.

Ordinary Mistakes to Avoid while Applying for a Business Loan

The process of business loan application can be made easier if you avoid certain mistakes. Even the best business plan got rejected if you make following mistakes:

  • Incomplete documents: If your documents are incomplete it may cause delay or destroy your chance to get a business loan.
  • Applied without business plan: Applying without a business plan can also cause problems, lenders want to see how you will utilize your funds.
  • Zero knowledge of interests or fees: You must recalculate repayment amounts, interest or fees in order to avoid future complications.
  • Exaggerate loan amount: If you ask for too much and overestimate your loan amount it will raise red flags.

Choose Almas Financial Services for Successful Business loan Application

Almas financial services helps through every thick and thin and will assist you in hectic free business loan application. You need to do following steps with us:

  • Choose an idea business plan: Our team will help and guide you which business plan is suitable. A comprehensive business plan will help you secure your business loan in dubai.
  • Keep a good capital score: Maintain a good credit history in order to increase your chances for the approval of your business loan.
  • Seek professional guidance: Before finalizing, look around and compare interest rates of different banks and before finalizing anything seek professional help.

Conclusion

Securing a business in dubai is very crucial for your smooth business journey and to fulfill your entrepreneurial aims. By considering various loan types, factors affecting your business loan applications, common mistakes, successful business loan application and eligibility benchmarks you can easily qualify to obtain your business loan to cater your financial needs. Professional guidance and the right path can help you achieve your business dreams in the vibrant economy of Dubai.

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