Top sources of funds for SMEs include family and friends, private funding, as well as savings and credit cards
A new MEED survey of SMEs in the UAE shows that financing is still a top challenge facing entrepreneurs.
Out of 152 SMEs surveyed, 67 respondents (or 45%) cited financing as one of the biggest challenges, out of which 21 said acquiring financing is proving to be a very difficult undertaking for small business owners in the UAE.
MEED compiled the data ahead of this year’s edition of the Gulf Capital SME Awards, which is now accepting entries for its annual recognition programme honouring outstanding business leaders and entrepreneurs as well as successful small businesses.
“The SME sector has been a critical element of the UAE’s economic success story, providing thousands of jobs and contributing over 95% to the country’s annual GDP. While many financial institutions have significantly increased allocations for loans and other financing packages for aspiring start-ups and small business owners, there remains a need for a more SME-friendly support system that will provide easy access to funds for aspiring entrepreneurs and for supporting the growth aspirations of existing businesses,” said Dr. Karim El Solh, Chief Executive Officer of Gulf Capital, the leading alternative investment firm in the Middle East and headline sponsor of the awards .
While the government has intensified its support for SMEs through the Khalifa Fund for Enterprise Development in Abu Dhabi, as well as an equity fund and other financial support provided by Dubai SME, many expatriate-owned start-ups, which account for almost 95% of the SME sector, still face huge obstacles in acquiring financing.
According to the survey, many SME owners still turn to family and friends as their top source for acquiring finance (49%), followed by banks (41%) and other sources; such as private firms, angel investors, and credit cards and savings (10%).
“Much of the difficulty in acquiring financing is rooted in the SMEs’ ability to provide a solid business and financial plan, though that needs to be addressed, entrepreneurs who have built a track record of success should find it easier than most to secure financing. This is where public recognition comes in, as it lends greater exposure for successful SMEs and affirms that they have a solid growth plan,” explained Becky Crayman, head of Awards, MEED.
In addition to recognising new businesses through the Start-up Business of the Year category, the Gulf Capital SME Awards is also inviting SMEs to submit entries in the following categories: Gulf Capital Business of the Year, Emirati Business of the Year, Small Business of the Year and Online Business of the Year.
The highly sought-after annual SME awards programme also honours impressive performance in key business success factors such as innovation, customer focus, employee-oriented initiatives, as well as sustainability practices and will be accepting nominations for Business Innovation of the Year, Customer Focus of the Year, People and Culture of the Year, and Sustainable Business of the Year. Meanwhile, the Entrepreneur of the Year and Business Leader of the Year awards will recognise outstanding entrepreneurial efforts and inspirational leadership. The deadline for submission of entries is on May 28, 2015.