UAE: How to get a business loan; minimum turnover, interest, repayment explained

Banks and financial institutions offer different types of loans in the country, ranging from start-up to Islamic finance lending

Web Desk

Published: Sun 10 Nov 2024, 4:34 PM

Last updated: Mon 11 Nov 2024, 3:34 PM

The UAE is a flourishing country for both those looking to find job opportunities as well as those who want to set up their businesses.

Along with a diverse market hosting various industries and a wide range of resources, the country's banks and financial institutions offer monetary resources and loans to help entrepreneurs kickstart their dreams.

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The UAE has set certain legal and eligibility requirements for those looking to get business loans. From minimum age to annual sales turnover, here is a guide to taking out a business loan in the UAE.

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Types of loans

Term loans

A term loan is a type of loan where a fixed amount is borrowed from a financial institution. This must be repaid in regular instalments. This also includes an interest amount. These loans typically range between one to 10 years.

Start-up loans

Although most banks require a set number of minimum years of operation along with a required sales turnover, when it comes to start-up loans, these requirements are flexible. For new business, the loans offered by banks or financial institutions tend to have smaller amounts and shorter repayment periods.

Small business loans

Small business loans offered by banks or financial institutions offer lower interest rates and smaller down payments. These loans often act as an investment for these businesses to start operations.

Trade finance loans

Trade finance loans are given in cases where a business may be involved in international trade. This type of loan covers expenses like shipping and inventory among other export and import related costs.

Islamic finance

For those who want to take loans as per the Islamic Shariah laws, Islamic financing loans are a good option as they are interest-free. Instead of charging interest, these institutions may have in place some profit-sharing or leasing agreements.

Equipment finance loans

Equipment financing loans are for businesses that may need funding for specific tools or equipment.

Eligibility

Individuals applying for the loans must be above the age of 21.
The business must have been operating for more than a year. This may differ on the basis of banks, with some financial institutions requiring a two-year work experience.
Annual sales turnover must be at least Dh1 million. Some lenders may require this to be higher.
Applicants must have an existing corporate bank account.

Documents required

Although requirements vary across different banks across the UAE, some of the required documents are:

Valid passport
Emirates ID copy
Bank statement copy (some banks may ask copy of last six months)
Business trade licence (The customers' name should be mentioned on the licence as an owner, partner, stake holder or manager)
VAT statements
Commercial tenancy contract
Partnership and LLC companies have to provide a Memorandum of Understanding.

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