Dubai SME fund offers Dh600m loan boost to Emirati entrepreneurs

Abdul Baset Al Janahi, chief executive of Dubai SME discusses entrepreneurship in Dubai with Saeed Matar Al Marri, the Deputy CEO. Victor Besa for The National.

Dubai SME has launched a Dh600 million fund to help new and existing Emirati businesses grow.

Four applicants have already been approved to access money from the fund, which offers interest-free loans for two years within a seven-year settlement period.

The main criteria for eligibility are that the project should be based in Dubai and be fully owned by an Emirati.

The fund offers two options. The Seed Capital Loan, offered directly from the fund, provides financing between Dh50,000 and Dh500,000. Its Credit Scheme Loan comes from banks and financial partners, and gives financing between Dh500,000 and Dh5 million. Dubai SME was able to establish the fund after the Business Village building, on Deira’s Clock Roundabout, was gifted to the agency by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.

“We offer two types of loans, but we are not like a bank. We look at forecasting while banks look at history,” said Abdul Baset Al Janahi, the chief executive of Dubai SME. “We are extremely flexible with regards to how and who we loan to. Any profit will be reinvested into the fund and redeployed. If the call on the fund is greater than our primary, we can leverage the asset of the Business Village.”

The fund says it aims to inspire Emiratis towards innovation and creativity in business and is not limited to particular sectors.

The initiative offers the Hamdan Incubation Centre for mentoring and support in a similar way to The Khalifa Fund for Enterprise Development, which offers Emiratis funding for start-ups regardless of the emirate in which they are based.

“We do not require funds from our applicants to start the business,” said Saeed Matar Al Marri, Dubai SME’s deputy chief executive.

“We are in the process of signing memorandums of understanding with several banks. To ensure repayment for the Credit Scheme Loan, we will require post-dated cheques. It will be like a normal loan, which requires collateral, but at preferable rates.

“For The Seed Capital Loan, we will ensure repayment through our processes of post-fund monitoring, a regular review of the financial health of the business. If the business can be used by government services or agencies we will use our contacts to ensure another line of custom for the business.”

A new law to support small and medium-sized Emirati-owned businesses was introduced last year. It requires federal authorities and ministries to direct a minimum of 10 per cent of their procurement budgets towards the SMEs for purchasing, servicing and consulting. Enterprises in which the government has a stake of 25 per cent or more must also ensure at least 5 per cent of their contracts are placed with SMEs.