The departure of several major banks from the United Arab Emirates in recent years signaled a new shift for small business lending in the nation. Government initiatives and the influx of alternative lending have worked to fill the SME lending gap in the nation, but while progress has been made, the latest research suggests that small businesses are still struggling to access working capital.
In a recent MEED survey of 152 UAE-based small businesses, 45 percent of respondents said financing remains a top challenge to them. Out of these businesses, 21 of them cited access to finance as very difficult for UAE small firms.
The research revealed some other intriguing trends about the plight of SMEs in the nation to access working capital. For example, nearly half said that they turn to family or friends to access funding; 41 percent said they still turn to banks, credit card and angel investors.
“While many financial institutions have significantly increased allocations for loans and other financing packages for aspiring startups and small business owners, there remains a need for a more SME-friendly support system that will provide easy access to funds for aspiring entrepreneurs and support the growth aspirations of existing businesses,” said Gulf Capital CEO Dr. Karim El Solh. Gulf Capital is preparing for this year’s SME Awards, during which it honors national SMEs.
This sentiment among SMEs in the nation follows recent efforts by alternative lenders to increase businesses’ access to financing. Recent members of the UAE’s financial community gathered last month to discuss the rise of P2P lending, applauding recent efforts from businesses like Beehive Group for providing new ways for business owners to access funding.
The Dubai government has taken it upon itself to aid struggling small businesses through a newly announced partnership with Citi, which aims to provide supply chain financing to small businesses that need to get paid more quickly than they are now.