The United Arab Emirates is known to be an encouraging place for fresh entrepreneurs to open their companies. Dubai is a dream location to establish a new start-up due to its ease of doing business and business-friendly tax policies. For these and more reasons, countless entrepreneurs come to this land of gold every year to try their luck.
But to start a business in Dubai, you would require some investment or need to raise capital. A great way to get initial funding is to get a loan from someone. The best way to do so is to apply for a business loan in Dubai, UAE at any bank. This guide will take you through the process of applying for a loan along with other requirements. As a bonus, we will also provide you with helpful tips that will make the process easy for you.
Eligibility Criteria to Apply for Business Loan in Dubai, UAE
The qualifying requirements offered by the relevant bank must be taken into consideration before contacting them to apply for a business loan.
Banks in the UAE offer various loan categories to various business sectors. A loan for starting a new business in the UAE can be taken out for one to four years.
The standard considerations for all banks that offer business loans are listed below.
- To qualify for a loan, your business must have a minimum yearly revenue of AED 1 million.
- Getting a loan is thought to be simple if your company is a subsidiary or branch of any offshore firm.
- The company must have been around for at least one year.
Required Documents for Business Loan in Dubai, UAE
The application procedure for getting a business loan might be sped up by preparing the essential paperwork in advance. If you have authentic and legitimate documentation, getting a business loan in Dubai becomes simple, regardless of how big or little your company is. The bank statement is the most significant and essential document when it comes to paperwork for a loan.
The following is the typical documentation needed by banks when you request a company loan:
- Filled out the bank application
- Passport photocopy of the loan applicant
- Bank records from the last six to twelve months
- The partnership agreement, Article of Association, Power of Attorney (POA), or Memorandum of Association (MOA)
- For verification, submit both the original and a copy of your trade license
Along with the above-mentioned mandatory documents, many banks frequently require the following extra paperwork, which you should have with you:
- Trade license
- Owners home residence tenancy contract or sharing accommodation letter
- Lading bill (if applicable)
- High volume transaction invoices
- Audit report
- VAT certificate
- List of employees obtained from the Ministry of Labor
Basics of Trade License
A trade license is a crucial document for independent people. It is an authorization granted by the UAE government to investors allowing them to establish and run a company there. For each trade, there are certain licenses that depend on the type of business you have. The cost of a trade license varies depending on the situation. The majority of business owners opt for a general trade license, which allows them to operate their operation for all supplies and goods. A trade license is very helpful when applying for loans in the UAE, and not only just business loans.
Get Familiar With The Concept of Islamic Finance in Dubai, UAE
When you plan to apply for a business loan, you should familiarize yourself with the descriptive concept of Islamic finance in Dubai, UAE. Here are the details that you must know:
What is Islamic Finance?
Islamic Finance is the comprehensive terminology for all financial transactions and investments that adhere to Islamic Law, also known as Sharia. The following are a few of the fundamental principles of Islamic finance:
- The use of money must be for productive means.
- Money must be made through lawful asset investments and business trades.
- It is unlawful to borrow or lend money in order to gain interest.
How is Islamic Finance Different from Traditional Finance?
Islamic Finance consequently adheres to the idea of profit and loss sharing within a contract because interest is prohibited under Islamic Law. Out of all types of contracts, the mudarabah is the most popular one. This agreement makes it crystal clear how the entrepreneur and investor will split earnings and losses. In addition to that, the investor will also be responsible and will compensate for all losses. However, according to conventional finance, the entrepreneur is required to pay interest no matter how good or bad the company’s financial situation is.
Frequently Asked Questions
Can I get a loan to start a business in UAE?
Yes, you can get a loan to start a business in Dubai, UAE. If you meet the requirements, your small business can qualify for business loans. In the UAE, the particular requirements vary from bank to bank. However, some minimal criteria apply to all banks including the company must have been operational for at least two years.
Is it easy to get a business loan in Dubai?
Yes, it is very easy to get a business loan in Dubai. But occasionally, the process sounds complicated. You need to obtain the appropriate license and gather the required paperwork in order for the business loan to be approved. Dubai banks demand companies to meet the set requirements in order to approve a loan.
Which bank gives a business loan easily in UAE?
Many banks give startup business loans easily in the UAE such as:
- ADCB
- Emirates NBD
- Mashreq Bank
- Rak Bank and more
How do I qualify for a loan in Dubai?
There is a certain criterion that you should qualify in order to apply for a small business loan in Dubai.
- To qualify for a loan, your business must have a minimum yearly revenue of AED 1 million.
- Getting a loan is thought to be simple if your company is a subsidiary or branch of any offshore firm.
- The company must have been around for at least one year.
What is documentation required for a business loan in UAE?
The documentation required for a business loan in the UAE such as:
- Filled out the bank application
- Passport photocopy of the loan applicant
- Bank records from the last six to twelve months
- Partnership agreement, Article of Association, Power of Attorney (POA), or Memorandum of Association (MOA)
- For verification, submit both the original and a copy of your trade license
Even though applying for a business loan in Dubai is simple, the process might occasionally seem difficult. You need to obtain the appropriate license and gather the required paperwork in order for the loan to be approved. Dubai banks have stringent compliance requirements. The bank will reject your application if there is any difference between business activity and licensing.
Please Note: We do not provide any assistance regarding the business loan in Dubai, UAE. Read more about our company and how we strive to bring business services to our clients.
