Dubai SME Allocates AED 20 Million to Guarantee Capital for SMEs

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CORONAVIRUS IMPACT

Dubai-Based SMEs owned or managed by an Emirati can benefit from scheme

  • Three-month payment holiday for SMEs to help during Covid-19
  • Eligible SMEs can access funding at low rates
  • Protection for investors

Dubai SME, the agency of Dubai Economy mandated to develop the small and medium enterprise (SME) sector, has allocated AED 20 million for the capital guarantee scheme launched by its financial arm, The Mohammed Bin Rashid Fund (The Fund), in partnership with Beehive, the first regulated peer-to-peer (P2P) lending platform in the Middle East & North Africa (MENA) region. The guarantee pool will enable more SMEs and investors to leverage financial technology to support business continuity and growth while also stimulating economic growth.

The Fund and Beehive recently renewed and updated their existing partnership by broadening the channels of eligibility for SMEs to access financing, and for investors to reap high returns by participating in entrepreneurial startups. 

The original agreement had enabled Dubai-based SMEs that are 100% owned and managed by an Emirati to request financing of up to AED780,000, backed by a full capital guarantee extended by The Fund from a total guarantee pool of AED 20 million.  In a significant update to the agreement, Dubai-based SMEs that are 50% or more owned and managed by an Emirati are now also eligible for financing of up to AED420,000, which will be backed by a 50% capital guarantee. 

Furthermore, the update allows businesses eligible for new financing to get a three-months payment holiday at the beginning of their loan term, which will be followed by a 24-months payment schedule.

His Excellency Sami Al Qamzi, Director-General of Dubai Economy, said access to finance is key to the creation, sustainability and growth of SMEs. “The strengths and diversity of SMEs are strategic assets for Dubai in ensuring that business activity remains uninterrupted and new opportunities are created continuously. The agreement between Mohammed Bin Rashid Fund for SMEs and Beehive extends the benefits of their partnership to a wider SME community and will thereby strengthen the position of Dubai as a competitive hub for business and entrepreneurship, particularly during the present global economic challenges.” 

The loan guarantee scheme will allow eligible SMEs to access funding at lower rates and give protection to investors that support these businesses.  This is critical for Dubai’s SMEs that are currently facing a cash crunch and will allow them to continue their operations and paying their bills. The total guarantee pool of AED20 million will ensure this financial tool can be utilized by many eligible SMEs.

Abdul Baset Al Janahi, CEO of Dubai SME, said that the partnership with Beehive is also a unique opportunity for investors in Dubai. “Investors on Beehive’s platform can invest from as little as AED100 into multiple businesses, and this new agreement will enable low risk investing, as well as the confidence which comes from having a diversified portfolio. Furthermore, it should help restore investor confidence in SME especially in view of the impact of COVID-19 on their operation.”

Craig Moore, CEO of Beehive, said: “We are delighted to extend this important partnership with Dubai SME and by introducing additional services which will allow the benefits to be appreciated by more SMEs, especially those who need it at this challenging time.” 

Dubai-based SMEs Facility Type Maximum Facility Amount Expected borrowing rate Expected average profit rate for investors Capital guarantee% Payment Holiday Re-payment period  
100% Emirati owned & managed Working Capital Finance AED 780,000 from 0.9% per month 1% per month 100% N/A 150   days  
Term Finance from 4.7% per annum 10% per annum 3 months 24 months  
50% Emirati owned & managed Working Capital Finance AED 420,000 from 0.9% per month 1% per month 50% N/A 150 days  
Term Finance from 4.7% per annum 10% per annum 3 months 24 months  

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