Introduction
As you may already be aware, the
1. How Businesses are Commonly Funded
Below are some of the most common ways companies in the
- Bank Loans: Banks in the
UAE offer a range of financing options, including term loans, working capital loans, and trade finance facilities. These loans are available to companies and businesses with a strong financial standing and creditworthiness. The loan amount and interest rates are usually determined by the borrower's credit score, financials, the purpose of the loan, and other factors. -
Venture Capital: Venture capital firms invest money in start-ups or early-stage companies with high growth potential. In return, they usually get equity in the company. The
UAE has a growing venture capital industry, and several venture capital firms are willing to invest in promising businesses. Angel Investors : Angel investors are wealthy individuals who provide capital to start-ups and early-stage companies. They usually do so in exchange for equity in the company. Angel investors in theUAE are often looking for companies with a unique business idea, a competent management team, and good growth potential.-
Alternative lenders: In addition to traditional banks, there are several alternative lenders in the
UAE that provide financing to small businesses. These lenders have more flexible lending requirements and may be willing to lend to businesses with lower credit scores or without collateral. -
Crowdfunding: Crowdfunding is becoming increasingly popular in the
UAE as a way for businesses to raise capital. Crowdfunding platforms allow businesses to raise funds from a large number of people who can each invest small amounts. Examples of crowdfunding platforms available in theUAE includeEureeca and Beehive. -
Initial Public Offering (IPO): Companies in the
UAE can raise capital by offering shares of their company to the public through an Initial Public Offering (IPO). This is a popular way for large corporations in theUAE to raise capital to finance their expansion plans. Examples of companies in theUAE that have gone public through an IPO includeEmaar Properties andDubai Islamic Bank .
Despite the options above, many individuals and businesses in the
2. Reasons Why Obtaining Loans in the
Lack of Credit History: One of the main reasons why obtaining loans in the
High Debt-to-Income Ratios: The
Stringent Borrowing Criteria: Many banks in the
High Interest Rates: The interest rates on business loans in the
Lengthy Approval Processes: The approval process for business loans in the
Finally, the economic situation in the
3. Suggestions to Get Financing in the
To increase your chances of obtaining loans in the
One useful suggestion is to establish a relationship with the bank or financial institution. This can involve opening a bank account, making prompt payments on bills and loans, and building up some liquidity. Further, to improve your debt-to-income ratio, you can prioritize paying off high-interest debt, such as credit cards. You can also negotiate with lenders to restructure or consolidate debt to make repayments more manageable.
Other existing funding initiatives are the following:
Government Support Programs:
The
Khalifa Fund for Enterprise Development :The Khalifa Fund for Enterprise Development provides financial assistance and support toEmirati entrepreneurs and small businesses. The fund offers several financing options, including loans, grants, and equity investments, and provides support in the form of mentorship and business development services.-
Dubai SME: Dubai SME is a government agency that supports the development of small and medium-sized enterprises (SMEs) in Dubai. The agency provides financing through its
Business Support Fund , which offers loans to SMEs at competitive interest rates. -
Dubai Future Accelerators: Dubai Future Accelerators is an initiative launched by the
Dubai Future Foundation to support startups working on futuristic technologies. The program provides startups with access to funding, mentorship, and collaboration opportunities with government entities.
Private Funding Initiatives:
In addition to government support programs, we have look earlier look at several private funding initiatives in the
- Venture Capital Firms: Venture capital firms provide funding to startups in exchange for equity. There are several venture capital firms in the
UAE , includingBECO Capital ,Wamda Capital , andMiddle East Venture Partners (MEVP), that provide funding to startups across various sectors. Angel Investors : Angel investors are individuals who provide funding to startups in exchange for equity. There are several angel investor networks in theUAE , including the Dubai Angel Investors Network and the Sharjah Angel Investors Network, that provide funding to startups.-
Crowdfunding: Crowdfunding platforms have gained popularity in the
UAE , providing startups with access to a large pool of individual investors. Platforms such asEureeca and Beehive provide startups with an alternative source of funding, allowing them to raise capital from a diverse group of investors.
Cryptocurrency Funding
In recent years, cryptocurrency has become an increasingly popular way for businesses in the
- Initial Coin Offerings (ICOs): An Initial Coin Offering (ICO) is a fundraising mechanism used by businesses to raise capital by issuing new digital tokens or coins in exchange for cryptocurrency. Businesses in the
UAE can use ICOs to fund their operations by offering tokens or coins that represent a share of ownership or a future reward for early investors. For example, in 2017, Dubai-based blockchain start-up ArabianChain Technology launched an ICO, raising$817,000 to develop a new blockchain-based platform for the Islamic finance industry. -
Cryptocurrency Loans: Cryptocurrency loans are another way for businesses in the
UAE to obtain funding using cryptocurrency. In this model, businesses can borrow cryptocurrency from individuals or companies in exchange for interest. The borrower can use the cryptocurrency to fund their operations or other ventures. For example, in 2020, aUAE -based start-up called Rain raised$6 million in a seed funding round led byMiddle East Venture Partners . The funds were used to expand the company's cryptocurrency exchange platform. -
Cryptocurrency Mining: Cryptocurrency mining is the process of verifying transactions on a blockchain network and receiving rewards in the form of cryptocurrency. Businesses in the
UAE can use cryptocurrency mining as a means of generating income, which can be used to fund their operations. However, this method requires a significant investment in hardware and energy costs. For example, in 2019, Dubai-based blockchain start-up BitOasis launched a cryptocurrency mining platform that allowed users to mine various cryptocurrencies, including Bitcoin and Ethereum. -
Payment Processing: Businesses in the
UAE can also accept cryptocurrency payments as a means of funding their operations. By accepting cryptocurrencies such as Bitcoin, businesses can increase their customer base and reach a global audience. Additionally, cryptocurrencies offer faster processing times and lower transaction fees than traditional payment methods, which can help to reduce costs for businesses. For example, in 2019, Dubai-based real estate developerEmaar Properties announced that it would accept Bitcoin and Ethereum payments for property purchases.
Conclusion:
The
Originally published
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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