Business Loans for Your New Company

For years, Dubai has positioned itself as a global business hub, drawing in entrepreneurs from across the globe with its favorable business environment and minimal tax responsibilities. It’s home to many lucrative business opportunities and provides plenty of infrastructure to help newly formed companies succeed.

Investors interested in company formation in the UAE may need a business loan to cover startup costs and business expenses. However, if you’re unfamiliar with applying for a business loan in the Emirates, that’s okay! In this blog, we’ll walk you through the steps to apply for a business loan in Dubai.

Criteria to Apply for a Business Loan in Dubai

You’ll need to meet specific criteria to be eligible for a business loan with a banking institution in the UAE. This criterion may vary based on the bank’s regulations and determine how much you’ll be able to borrow. When you apply for a loan, the bank will thoroughly review the applicant’s financial history and issue a loan based on their decision. And though these criteria can change from bank to bank, certain prerequisites will be universal. These include:

• Applicants must be at least 21 years of age
• You must present current account statements that are no older than six months
• Applicants must have a corporate account at the UAE bank issuing the loan
• Annual gross earnings must be AED 1 million or higher
• Subsidiaries and offshore branches are permitted to receive a business loan
• Firms must be operational for no less than two years

Different Types of Business Loans

When you seek a loan with a banking institution in Dubai, you’ll be able to choose between several loan types. These types of loans include:

1. Standard Business Loans

A standard business loan allows recipients to make fixed monthly payments over a structured period. It also has specific payment terms that are either fixed or variable, depending on the circumstances.

2. Small Business Association (SBA) Loans

Loans backed by the SBA are directly supported by the government and are a great alternative if traditional loans are unsuccessful.

3. Credit Card Loans

These types of loans generally occur in the form of funds advanced via a credit card. And while it is a reasonable alternative, this method will often come with extremely high-interest rates.

Applying for a Business Loan for a New Company? Here Are the Documents You’ll Need

When you submit your business loan application to your bank, there are several documents you’ll be expected to provide. Having these documents handy will ensure that the application process goes smoothly. Here’s what you’ll need:

• Bank statements from the last six months
• Articles of Association (AOA)
• Memorandum of Association (MOA)
• Power of Attorney (if applicable)
• Copy of trade license, along with the original for validation
• Copy of loan participant’s passport

In addition to these documents, some banking institutions will also request the following records:

• VAT Certificate
• High Volume Transaction invoices
• Audit Report
• Trade License
• List of Employees
• Lading Bill (if necessary)

Becoming Familiar with Islamic Finance in Dubai

Investors and business owners in the UAE will need to familiarize themselves with the difference between Islamic and traditional finance. Traditional financing principles will use a system of determining interest on loans and investments. However, Islamic Finance refers to any financial activities under Sharia Law. Some examples of the core tenets of this system include rules like:

• Money can only be earned through legitimate trade practices
• It is expressly forbidden to earn interest through the borrowing or lending of money
• Funds may only be spent on productive expenses

Since earning interest is forbidden under Islamic Law, many institutions will follow a contractual system of profit and loss sharing. In some cases, these contracts will directly specify how profits and losses are handled between investors and entrepreneurs.

Frequently Asked Questions About Securing Loans for Business in the UAE

Understanding the steps to setup a business in Dubai can be challenging for investors unfamiliar with Dubai business practices. And while many choose third-party business consultant experts to help them navigate the process, if you’re on your own, you probably have a few questions about the process. To help make sense of it all, we’ve put together a few frequently asked questions about the subject.

1. Is it easy to get a loan in Dubai?

Yes! While there are numerous criteria that the bank will use to determine whether you qualify for a loan, the process is designed to be straightforward and stress-free.

2. How do I qualify for a loan in Dubai?

Business loans in Dubai require several pieces of criteria to qualify, including:

• Must be 21 years or older
• You must provide current bank statements
• Your earnings must be above AED 1 million annually
• Operational for at least two years

3. What types of business loans are available in Dubai?

There are several loan types in the region, including:

• Standard business loans
• Friends and family loans
• Credit Card loans
• Small Business Association Loans

4. What documents are required to secure a business loan?

When you apply for a business loan, you’ll need to have the following:

• Bank statements going back 6-12 months
• Completed application form
• Copy of trade license
• Copy of loan applicant’s passport
• Articles of Association
• Memorandum of Association
• Power of Attorney (If applicable)

Need a Business Loan in Dubai? MSZ Consultancy Can Help!

If you’re a business owner hoping to secure a loan for your business in the UAE, MSZ Consultancy can help! We have experience assisting investors and entrepreneurs in developing their business investments. From business setup in Dubai to securing loans for business in the UAE, we handle it all!

Our team of business experts can also help you navigate the ins and outs of visa application processes, PRO services, and much more!

So, if you’re ready to take the reins of your investments for the future, give MSZ Consultancy a call at +971 52 544 1248! We’ll be happy to provide you with a free quote and a detailed plan on how we can maximize your profits while minimizing the overhead. Take control of your business today with MSZ Consultancy!

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