First Gulf Bank (FGB), the third-largest lender by assets in the UAE, has announced that it will offer a one-stop financing solution for startups in the country, the state-run news agency WAM reported on Sunday (27 September).
The bank’s Startup Proposition is expected to promote small and medium enterprises (SMEs) in the country.
There are more than 350,000 SMEs operating within the UAE, representing almost 92 per cent of the total number of companies in the country and accounting for more than 60 percent of the country’s GDP. The SMEs account for more than 86 per cent of the total jobs in the private sector.
Financing for SMEs has remained a concern for the banks in the country as they considered any assistance as unsecured lending, because of the nature of such firms’ functioning. Most of the SMEs operate without proper books and do not publicise their performance results, because of which banks cannot ascertain their financial worthiness. Therefore, the total loans given to SMEs represent only four percent of total lending in the country.
A survey carried out in the beginning of September by the Gulf Finance Corporation, a subsidiary of Shuaa Capital, showed that SMEs in the UAE are less optimistic about prospects for sales and growth in the third quarter after worsening market conditions and decreased financing woes.
However, FGB says that it is essential to facilitate financial access for SMEs to foster economic growth in the UAE.
“Starting any new business requires funding. However, SMEs often find it difficult to access the financial support they need to get up and running, and start operating efficiently. With the launch of our new Startup Proposition, we want to meet businesses’ immediate requirements and cater to their needs at each stage, without collaterals required,” says Hana Al Rostamani, Head of Consumer Banking at FGB.
“As part of our efforts to further develop the SME segment in the UAE, we’re looking to build long-term partnerships with local businesses and support them throughout their business journey,” she adds.
The bank’s move will support new businesses in the initial stages of their business venture by providing start-up loans and working capital facilities. Additionally, it will provide the emerging companies with ‘no minimum balance’ current accounts and business credit cards in the first six months of operation.
The bank will also offer a combination of cash loans and trade facilities to companies that are operational for at least 18 to 24 months.