Checklist small businesses in the Gulf can bank on

The Life: Top questions for the Gulf's small business owners to consider before they sit down with a bank.

National Bank of Abu Dhabi has signed an agreement with Dubai SME to promote entrepreneurship.

Having been shunned by banks during the global economic downturn, small-to-medium-sized enterprises (SMEs) are experiencing a popular revival. Schemes are springing up weekly to help boost lending, facilitate angel investment and develop sales and marketing strategies.

National Bank of Abu Dhabi (NBAD) last week signed an agreement with Dubai SME, an agency of Dubai Economic Development, to promote entrepreneurship and expand the bank's services to SMEs, and Emirates Islamic Bank is developing a team to lend solely to the start-up market.

In addition, the Khalifa Fund is working with a number of banks to facilitate lending and Standard Chartered will today launch its own initiative to boost the SME sector.

Given this increasing number of options, what factors should a small business owner consider when picking a banking partner? Apart from the obvious - the availability and cost of credit - here are some questions to consider, according to Mary Goodman and Rich Russakoff, the co-founders of Bottom Line Up Enterprises, a US-based SME coaching consultancy:

1. Is the bank healthy with strong financials?

Given today's economic climate and the recent rise in bank failures, entrepreneurs must check the health of any bank. One place to start is Global Finance's ranking of The World's 50 Safest Banks - NBAD has made the cut for the past two years.

2. Does the bank have a business division focused on lending to SMEs? What percentage of the bank's business is geared to this market?

Rather than searching on bank websites, which can often include a lot of hype, Bottom Line Up Enterprises recommends speaking to the right person in the appropriate division. "You'll get much more information if you call and ask detailed questions," the consultancy says.

3. Is the bank familiar and comfortable with the SME industry? What type of business does it lend to? In which industries does the bank specialize?

SMEs should specify they are looking for a long-term relationship with a bank. If the bank doesn't work with companies in the SME industry, entrepreneurs should ask for recommendations for other banks. Local banking markets are small and bankers are well aware of what type of loans their competitors are making.

4. What mix of services and products does the bank offer?

Businesses should be aware of what they need: traditional loans; lines of credit; credit cards; direct deposit; or auto/equipment leasing.

5. Does the loan amount fit within the bank's lending limits? Can the bank handle a company's increasing financing and banking needs?

Many banks have different divisions handling loans based upon the size of the loan and the size of the company. Smaller banks may have ceilings on how much they can loan to one business, while larger banks may have a minimum size loan.

6. Is it easy to secure a meeting with the right person who makes the lending decisions?

Bottom Line says it is "always a plus" if a senior manager takes an interest. While this may not guarantee a loan, entrepreneurs might receive preferential treatment.

7. Is the bank willing to meet at an SME's premises?

If a business "shows" well - that is, if its appearance indicates a thriving, well-organised operation - it is always better to meet the banker on site.

8. How long has the loan officer been with the bank? What is their expertise and level of experience in working with small and mid-sized businesses?

Many loan officers who appear authoritative have very little lending power, so it's important to sit down with someone actually in a position to make a decision if possible.

* with Reuters