Business brings fortune, especially if it is done in an economically stable city like Dubai. The economic city of Dubai beckons innovative minds with the promise of entrepreneurial success. But, one major problems faced by many people over the years is the inability to get the required fund to set up a working business.
Not everyone is born with a silver spoon or has a job which salary can give enough to start a business. The people might find it difficult to set up a business, and end up getting discouraged. It means, their hopes and aspirations have been jeopardized. But, it shouldn’t be so.
Whether you are a start-up looking to grow your business or an established company in need of working capital, there are financing solutions to meet your business needs in Dubai. Fortunately, there are numerous options available for business owners looking to finance their operations in this bustling city.
There is no gainsaying in the fact that, for business-oriented individuals in the Gulf countries, getting funding can be difficult, but, fear not, this post provides a comprehensive guide that is tailored specifically for you. It is well-researched and there is a high probability that it will serve as your map by revealing diverse ways of funding opportunities to transform your vision into reality.
Getting Prepared for the Funding
1. Craft a Compelling Business Plan:
A business plan outlines the goals, strategies, and financial projections of the business, which can help lenders assess the creditworthiness of the business. Lenders will also consider the business owner’s personal credit history, collateral, and repayment ability when deciding whether to approve a business loan. So, in getting ready to get funding for your business here in Dubai, you need to get a Business Plan ready.
The roadmap in the business plan showcases your vision, strategy, and financial projections, convincing investors you’re worth backing. Think of it as a detailed map, ensuring your journey to funding is well-planned. So, prepare for it well.
It is advisable to get a professional Business Plan Writer to write it for you; however, there is no harm if you write it yourself, provided you have the required skills
2. Get Network and Support
Opportunities are abound, but they are always available to people who have the information. It is important to connect with other entrepreneurs, in order to share experiences, challenges, successful strategies and most importantly share funding opportunities.
In circles like this, you will learn how to build genuine connections with investors and understand their interests.
In your journey make it an ultimate task to seek guidance from experienced individuals who can offer valuable insights and feedback on your business plan and funding strategy.
3. Seek Expert Guidance: It is not wise to navigate the funding desert alone. Business incubators, mentors, and financial advisors can provide invaluable support. Consider them experienced guides who can help you avoid pitfalls and find hidden oasis.
Challenges Faced by Entrepreneurs in Accessing Funds
Dubai beckons entrepreneurs with the promise of boundless funding opportunities, but there seem to be some challenges. You need to take note of all these challenges and get prepared for it before you start your journey to access funding.
i). New businesses often lack the established credit history required for bank loans.
ii) New businesses often find it difficult to get the required collateral to get loans.
iii). Banks typically prioritize businesses with proven records and specific industry experience. This leave many innovative and early-stage ideas struggling to access traditional funding.
iv). Investors may be hesitant to invest in unproven businesses with perceived higher risks
v). There is competition for limited funding among businesses, and this make it more challenging to stand out.
vi). There are some investors that will always expect a high an unrealistic return with low risk, leading to mismatch of the reality of the new businesses
vii). Entrepreneurs may not be fully aware of all the available financing options, making it harder to find the best to fit their needs.
viii). Some business do not have experts in finances who can help them navigate the financial terms, loan structures and investor pitches can be challenging for non-finance professionals.
TRADITIONAL FUNDING OPTIONS FOR BUSINESSES IN DUBAI
Bank Loan
Imagine you need a financial boost and you see something offering you a sum of cash in exchange for your promise to repay it, plus interest. That is the bank loan. The bank gives you a chunk of cash, depending on your eligibility and the loan type and you repay it over a set period, typically with interest added.
Why Should You Consider Bank Loans as an Option for Your Funding?
- Flexibility
Loans taking from bank can cater for diverse needs, from short-term working capital injections to long-term investments in equipment or expansion.
- Structured Support
Repaying the loan in installments will help you to create a manageable financial commitment and encourage you to spend responsibly.
- Credibility Boost
When you secure a loan, it demonstrates financial stability of your business and can enhance your business’s reputation.
Getting Bank Loans
- Banks will assess your business’s financial health, track record, and future prospects. Strong financials and a well-defined business plan increase your chances of approval.
- You will be chance to explore options like term loans for specific projects, working capital loans for everyday expenses, or trade finance to facilitate international transactions.
- Interest rates vary based on your profile, loan type, and market conditions. Compare offerings from different banks to secure the best deal.
- Unsecured loans offer convenience but typically have higher rates. Secured loans require pledging assets like property or equipment, potentially lowering rates but increasing risk.
Eligibility
- Residents: Generally, you’ll need to be a resident for at least 6 months, have a stable job with a minimum salary (depending on the bank and loan type), and a clean credit history.
- Expats: Similar criteria apply, but some banks might require higher salaries or a guarantor depending on your nationality and employment status.
- SMEs: Businesses need to be registered in the UAE, have a good track record, and meet specific financial stability criteria set by the bank.
- Gulf Nationals: Enjoy some relaxed eligibility requirements in certain schemes, often with preferential rates and terms.
Alternative Funding Options for Businesses in Dubai
a). Crowd Funding:
This online platform allows you to tap into the collective power of individual investors, transforming your network into a virtual oasis of support. Picture hundreds of small contributions adding up to a powerful stream, nourishing your venture’s growth.
b). Angel Investors:
Seasoned individuals with a thirst for promising ventures act as your guiding stars, providing crucial seed funding and mentorship in the early stages. Think of them as experienced travelers offering essential supplies and wisdom for your journey.
c). Islamic Financial Solutions
It is also possible for you to get financial support from a Sharia-compliant bank. Here are some available financial help you can benefit from:
- Musharaka (profit-sharing partnership):
In this, you partner with the bank, share both profits and losses based on predetermined ratios. This type of funding offers flexibility but requires close collaboration and risk-sharing.
- Mudarabah (investment partnership):
Here, you entrust the bank with capital and you receive a share of profits based on performance. This one is less involved than Musharaka but offers less control.
- Murabaha (cost-plus financing):
With this, the bank purchases an asset you need and sells it to you with a markup. The refund will be spread over time. It is transparent and simple but can have higher effective costs.
- Ijara (leasing)
The bank owns an asset and leases it to you with fixed payments, eventually transferring ownership upon completion. This financial solution is suitable for acquiring equipment or property.
d). Islamic Crowd Funding:
- Platforms connect investors with Sharia-compliant ventures, allowing individuals to contribute. Offers wider reach and community support but might require a strong pitch and vetting process.
Sukuk (Islamic bonds):
Represent ownership in assets or projects, yielding periodic returns based on profits. Provides diversification and access to larger investments but requires careful due diligence.
- Dubai SME
This government initiative offers financial support, training, and advisory services, nurturing your start-up like a delicate desert vine. They provide fertile ground for your business to take root and flourish.
- DIFC Fintech Fund
If your innovation blooms in the fintech field, this dedicated fund can provide the financial rain you need to flourish.
- Mohammed Bin Rashid Innovation Fund: Does your vision push the boundaries of technology or design? This prestigious fund might be the oasis you’ve been searching for. They offer a rare opportunity for groundbreaking ideas to receive the support they deserve, like a hidden oasis nurturing visionary endeavours
By now, you should have understood your needs, be ready to explore available options, and approach lenders with a well-prepared plan. Do not forget you can also leverage bank loans to transform your Dubai business dream into a thriving reality. So, fuel your ambition and watch your business soar!
