In an effort to address the challenges UAE’s start-ups and SMEs face in accessing funding from banks, Emirates Development Bank (EDB) and Dubai Islamic Bank (DIB) have signed an MoU on a credit guarantee scheme for small and medium enterprises (SMEs) in the UAE.
The scheme is extended to start-ups which are 51 to 100 percent owned by UAE national and all expats in priority sectors such as healthcare, manufacturing, agriculture and technology. The focus is on entities that operate in the country.
Within the scope of the MoU, EDB will provide the credit guarantee programme to DIB’s small business customers, while DIB will offer up to AED10m financing, with half of the facility amount guaranteed by EDB. In total, DIB will aim to disburse a total of AED200m in financing.
“Emirates Development Bank is committed to supporting the UAE’s economic diversification strategy. To achieve this, one of the pivotal steps is to bridge the funding gap for SMEs, particularly those operating in priority economic sectors,” said Ahmed Mohamed Al Naqbi, CEO of EDB.
“EDB is pleased to sign the MoU with Dubai Islamic Bank to facilitate easier access to financial sources for the SMEs, strengthening the ecosystem and supporting UAE’s goals to build a robust knowledge-based economy, and contributing to sustainable economic development,” he continued.
Financial lending for the SMEs
The new scheme provides a solid platform for emerging national companies and entrepreneur to explore new opportunities through innovation such as smart industries and will assist SMEs and startups in the UAE to overcome the financial challenges of accessing funding from the banks.
In turn, the platform allows EDB and DIB to increase their financial lending for the SME segment, with a particular focus on priority industrial sectors.
“DIB has always been an active supporter of the UAE economy, aligning itself closely with the vision of the leadership to nurture and grow the business sector. Cultivating strong and trusted relationships and identifying opportunities to grow the SME ecosystem and has seen us contribute to the ongoing success and wealth of the nation,” said Adnan Chilwan, Group CEO of DIB.
“Our insight, experience and expertise provide the ideal platform from which to drive the growth of new start-ups and of established SMEs businesses, and we welcome the opportunity to partner with EDB on further enhancing our award-winning business banking experience,” he added.
The MoU is aligned with EDB’s recently-unveiled strategy, offering direct and indirect lending for SMEs (supply chain, project and long-term finance), an investment arm for startups and SMEs (accelerator, equity finance, business growth fund) and business advisory services for entrepreneurs, startups and small companies (coaching, consulting, mentoring, market research).
Similarly, DIB’s backing for this initiative complements its broader support for the UAE’s vision of creating a diverse and dynamic sector founded on innovation, stability and economic growth.
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