Dubai known as the land of gold is highly recommended to try your luck here. People come here in search of jobs, some as tourists and many as investors. Dubai is an ideal business setup location due to its geographical ease to connect many international markets but the question is what one should do if you have great business ideas but no capital to execute your business plan or some sometimes investors only have investment to kick start the business and no finance to grow it. In this case, Dubai financial institutions are established to help newcomers and even existing businesses. They evaluate the annual performance of the businesses and then grant them loans as per their requirements. Obtaining additional funding from banks are stepping stone towards growing a business in Dubai and ensuring its successful establishment in a long run.
Factors Considered while applying for a business loan:
If you are looking to apply for a business loan, you must keep in mind, the following factors that can prove fruitful to pay off this loan by knowing the exact details about your loan:
- Type of business loan you choose:
This is the key to your business to choose which loan best suits your business needs and the amount you require for your business is permissible in which category of loan, whether you are an SME, sole proprietor, or enterprise.
- Interest rate:
It depends on your company profile, your credit history, annual revenue generated, and the number of loans you already engaged in. Usually, the interest rate on a loan is standard with little variation as per business.
- Payment period:
Dubai financial institutes account for the repayment of loans within the period of 2 to 5 years depending on the instalment plan which is determined by the amount of cash taken from the bank.
- Bank Account:
Having an account is a must-have for registering a company in Dubai. To grant the loan, banks investigate through the company’s functional bank account. They look into the details of the transaction, and the revenue generated in the previous year to analyse the company’s performance and then decide whether a loan can be granted or not.
Types of Business Loan:
There are various types of business loans. Below are mentioned 5 key types of business loans:
1. Standard Business Loan: This type of loan demands fixed or variable rate monthly payments over an allocated time while the amount of the loan can be negotiated with interest rates accordingly.
2. Islamic Loan: This loan is entirely under Shariya Law and the interest rate is not permitted in Islamic loans instead the applicant has to give a share to the bank in his profits. Looking at the Islamic perspective this loan seems fulfilling the ethical and moral demands of business
3. Friends and Family Loan: This loan is taken from family and friends. As it is a non-financial institution loan with no involvement of the government, so no interest rate is levied on it. You simply agreed on the payment terms. It is a highly flexible way but relationships can be at risk over repayments.
4. Credit Card Loan: If you are having a functional bank account, you can take an advance loan on behalf of your credit card but it charges a very high-interest rate in return.
5. Small Business Association (SBA) Backed Loan: SBA is solely a UAE government-owned and supported entity. In case your bank loan application is rejected then you can go for this option.
Eligibility Criteria for applying for a business loan in Dubai:
Getting loan approval from a lending institute is a bit puzzling as the banks are quite particular about loan procedures in Dubai. Businesses that meet the eligibility criteria are welcome for a business loan in the UAE. However, all banks have these minimum requirements:
- The applicant must be 21 years of age.
- Must possess a corporate bank account.
- Must be equipped with a business license.
- The business must be running for at least 1 year.
- Lowest annual revenue (amount varies per bank)
- Business or personal bank statements for the last 6 to 12 months
Documents required for a business loan:
Here is the list of documents necessary to be submitted to banks to obtain a bank loan:
- Business Trade license for loan verification.
- Bank Account Statements (previous year)
- Bank Loan Application (filled)
- Passport Copy of the applicant
- Copy of AOA/MOA/ power of attorney (if required)
- Copy of tenancy agreement.
- Copy of VAT certificate.
- Company Audit reports.
- Employee list from Ministry of Labour (if required)
How KWS Can Help You?
Most people are not aware of the ways to get a loan at their ease, low-interest rates, not knowing of loan procedures, or the way to get an instant loan from the banks. All you need is someone to prepare your documents and reduce the chances of loan rejection on your behalf and here we come:
KWSME takes care of its customers, we approach you not only for business account opening in UAE but also to find the most suitable banks and loan installments for your business plan and prepare the necessary documents required by the chosen bank for a loan in Dubai.