Top UAE Banks Join Hands to Offer Credit Guarantees to SMEs

In a move that will further bolster the ever-expanding ecosystem of small and medium-sized enterprises (SMEs) in the UAE, Emirates Development Bank (EDB) has signed a Memorandum of Understanding (MoU) with Emirates NBD to provide strategic financing solutions to commercial establishments.

SMEs Are Key Players in the Economy

The MoU was signed to offer a credit guarantee scheme to SMEs to increase their contribution to the country’s GDP. According to UAE’s Ministry of Economy, SMEs comprised 94% of all companies operating in the country and employed more than 86% of the private sector’s workforce. In Dubai alone, SMEs accounted for nearly 95% of all enterprises, employing 42% of the workforce and accounting for 40% of the Emirate's GDP.

As per the pact, EDB will extend financing guarantee coverage of up to 50% of the amount lent to SMEs by Emirates NBD. Larger SMEs will get a maximum range of $1.4 million, whereas small enterprises will receive up to $136,131. The scheme will be widely applicable to SMEs in priority sectors, such as manufacturing, healthcare, infrastructure, food security, and technology.

Ahmed Mohamed Al Naqbi, Chief Executive Officer, EDB, believes, “Our partnership with Emirates NBD will support the country’s economic diversification plans by bridging the funding gap for SMEs. We look forward to facilitating easy access to financial sources for SMEs, supporting the UAE’s goals to build a robust knowledge-based economy and contributing to sustainable economic development.”

According to Shayne Nelson, Group CEO of Emirates NBD, “As a leading bank in the country, Emirates NBD has always championed the needs of homegrown SMEs that contribute to the UAE economy. We are pleased to join hands with EDB as part of our long-term, strategic commitment to further the growth of small businesses in the UAE through appropriate and timely financing support, enabling more entities to access credit easily to grow their businesses.”

More Approaches to Financial Institutions

EDB is aiming to support 13,500 companies and make a $2.73 billion additional contribution to the country’s economy. The MoU was part of EDB’s long-term strategy to offer direct and indirect lending to SMEs, demonstrating an investment arm for startups and SMEs as well as business advisory services for entrepreneurs. EDB played a key financial enabler role for the UAE’s economic diversification and industrial transformation agenda towards building a knowledge-based economy.

On the other hand, Emirates NBD will offer a comprehensive suite of banking services, including transactional banking, cash management, funded and non-funded facilities, and working capital financing to SMEs. Ranked among the top 20 in the Forbes’ list of the World’s Best Regarded Companies, Emirates NBD has assets worth $187 billion. It recently announced the creation of E20, a digital business bank for entrepreneurs and SMEs.

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