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7 P2P lending companies in the Arab region you need to know

Peer-to-peer (P2P) lending aka crowdfunding platforms are proving to be good alternatives to typical bank funding in the Middle East region. All you need to know about the sector and players

SMEs contribute nearly 60% of the UAE’s GDP and estimated to grow to 70% by 2021 Beehive successfully facilitated funding of over $100 million to more than 450 business funding requests Humming Realty gives investors insider access to pre-vetted real estate investments for as little as AED 1,000

Banks in the GCC had $2.3 trillion in assets at the end of 2019, yet their lending to SMEs represented less than 5% of total loans.  

SMEs contribute nearly 60% of the UAE’s GDP, estimated to grow to 70% by 2021.

Peer-to-peer (P2P) lending aka crowdfunding platforms are proving to be good alternatives in the Middle East region.

The P2P industry has grown by 17% a year and set to hit $312.6bn in 2020, split between ‘Business P2P’ lending ($219.1bn) and ‘Consumer P2P’ ($93.5bn). 

According to Market Watch, global P2P is expected to reach $590 bn by 2025, growing 50% from 2018. 

What is Crowdfunding?

Opposite to receiving funds from mainstream business finance such as banks, requiring business plans, product launches and long periods of capital injection from personal savings, crowdfunding a project happens by raising money from a large number of people, such as investors, friends, and family, through licensed online platforms, fairly quickly and without complicated or detailed complications and restrictions.

Crowdfunding in the UAE

The Dubai Financial Services Authority (DFSA) has introduced new crowdfunding regulations to ensure clear governance for fintech businesses and provide appropriate protection for their customers.

The current regulatory climate remains in its relative infancy for this industry.  

Top regional P2P players

1-Beehive is the first crowdfunding FinTech in the UAE, and is regulated by DFSA. Back in March 2019, Beehive secured $4 million of follow on investment from Riyad TAQNIA Fund (RTF) as part of a Series B funding round, bringing the total raised to $15.5 million since its launch. 

Beehive successfully facilitated funding of over $100 million to more than 450 business funding requests and registered more than 10,000 international retail and institutional investors.

Dubai SME, which is mandated to develop the SME sector, has allocated AED 20 million ($5.45 million) for a capital guarantee scheme in partnership with Beehive to enable more SMEs and investors to leverage financial technology to support business continuity and growth. 

Dubai-based SMEs that are 100% owned and managed by an Emirati can request financing of up to AED 780,000 ($212,300) while those 50% or more owned and managed by an Emirati are now eligible for financing of up to AED 420,000 ($114,440).

2Eureeca is an equity crowdfunding startup with offices in Dubai, London, Amsterdam, and Kuala Lumpur, and is also licensed by the DFSA.

Launched in 2013, Eureeca enables members of its investor network, who range from casual and angel investors to institutional firms, to buy shares in growth-oriented businesses, while providing operational businesses with crucial access to capital.

3-Ziina, a Dubai-based fintech, landed $850,000 in a pre-seed round and launched its social peer-to-peer (P2P) app, according to a MENAbytes report.

The app will allow bank account holders in the UAE to send and receive money “as easily as sending a text message” without an IBAN or Swift code.

Users are not charged a fee for transfers by Ziina, but some banks may take AED 1 ($0.27) per transfer.

On point of sale (POS) and prepaid card payments, Ziina plans to take a small percentage fee on all transactions from vendors. 

4-HBR

Humming Crowd Realty (HBR) is a UAE-based investment holdings company that spurs growth for local-start ups, SMEs, and other businesses.

Humming Realty uses real estate crowdfunding, giving investors insider access to pre-vetted real estate investments for as little as AED 1,000 ($272.5). Each real estate investment is tied to a real estate company that deals with the hassles of sanitary, tenants and maintenance.

 5Smart Crowd is a financial regulated digital investment platform in MENA with $600 000 in seed funding. 

For as low as $1,362, Smart Crowd allows investing in homes and makes money by charging a structuring fee based on the value of the property, set in 2 tranches: The first is a charge of 1.5% at the time of investment and 2.5% at the time of the exit. The company charges an admin fee up to 5% of the rent being earned on the property proportionate to investors’ share in the project.

6Zoomaal is a crowdfunding platform supporting the regions creatives, makers and community good doers.

Based in Lebanon since 2012, it encourages Arab entrepreneurs and creatives, including artists, filmmakers and authors, to submit their project pitches for funding by supporters from all around the world.  

7Yomken is based on an open-innovation crowdsourcing model where a specific challenge is posted online, and solutions are sought from the extended web community. Yomken also offers a crowdfunding platform for Micro and Small Enterprises (MSEs) and young, innovative entrepreneurs for seed funding and to market their products.