Emirates Islamic to offer start-up finance



Emirates Islamic Bank (EIB) is preparing to offer financing to start-up companies in the small to medium-sized business sector.

The bank, a subsidiary of Emirates NBD, is hiring business analysts and relationship managers to focus solely on lending to start-up entrepreneurs and small to medium-sized enterprise (SME).

It expects to roll out a number of products in the next quarter, including asset-based loans and working capital finance. Faisal Aqil, the head of retail banking at EIB, said the bank was the first in the country to offer direct loans to entrepreneurs of all nationalities for start-ups.

"We have the expertise, we are building a team and we will look to lend to the sector in the next three months," Mr Aqil said. "We are looking for entrepreneurs with a tight business plan and a strong idea."

Lending to SMEs is becoming an increasingly important area of growth for banks as the economic recovery takes hold.

The Khalifa Fund is in negotiations with a number of banks, including National Bank of Abu Dhabi, HSBC and Abu Dhabi Islamic Bank. The fund will underwrite part of the loans that banks extend to Emirati entrepreneurs.

Emirates NBD and EIB are already involved in financing Emirati entrepreneurs through the Al Tomooh Scheme,run by the Mohammed bin Rashid Al Maktoum Foundation. As part of the scheme, Emirati nationals receive interest-free financing.

"This scheme is part of our corporate social responsibility activities and our commitment to the community," Mr Aqil said. "But we now want to look at start-ups from a directly commercial perspective."

EIB currently offers finance to SMEs that have a two-year trading and financial track record. SME lending makes up 15 per cent of the bank's total loan portfolio and it now wants to expand aggressively. "SME lending is one of the more profitable areas of our loan book," Mr Aqil said. The bank will only look to finance entrepreneurs who are willing to match the size of the loan extended. Entrepreneurs traditionally struggle to receive finance because their business has no cash flow history and often no assets to borrow against. "This issue is particularly acute in the GCC," said Raj Madha, an analyst at Rasmala Investment Bank. "The region lacks the necessary information and a reliable, stable operating environment for SMEs."

When the economic crisis hit in 2008, EIB tightened its policy on lending to SMEs in segments most affected by the global downturn, mainly those associated with property. Mr Aqil said the bank had now "reopened" its policy on SMEs and the move into the start-up market reflected that.

The criteria is still stricter for property but financing opportunities for SMEs working in tourism, hospitality and retail have been unaffected by the crisis, he said.

"A few years back there was no SME market, lending focused on large corporations and few banks saw the opportunity," Mr Aqil said.

"This has changed in the last three or four years and most of the leading banks are starting to look at the start-up segment."

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Real Madrid (Vazquez 6')

Second leg, February 27

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2. Mario Mola (ESP) 57:09
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5. Jacob Birtwhistle (AUS) 57:40    
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