Banks urged to finance SMEs

Loans to SMEs are 4% of total lending against double-digit in developed world

By Abdul Basit

Published: Fri 28 Mar 2014, 11:15 PM

Last updated: Tue 7 Apr 2015, 10:31 PM

Despite the fact that more than 90 per cent companies registered in Dubai are small and medium enterprises (SMEs), banks are reluctant to provide loans to small business citing numerous reasons including regulatory compliance and transparency in business.

Its worth to note that bank loans to SMEs are just four per cent of the total lending in the UAE compared to double-digit in the developed world.

From left: Alexandar Williams, Richard Morrison, Amir Ahmed, Vikas Thapar, Mohamed Trabelsi, and Chris Thomas during the panel discussion on ‘Access to Finance for SMEs in the UAE: Opportunities and Challenges’ at SME World 2014 in Dubai which concluded on Thursday. — KT photos by Shihab

During the global financial crisis SME sector was resilient as a very few companies went back during that time, revealed Vikas Thapar, chief executive officer, SME Business, Emirates NBD, during a panel discussion on the second day of SME World 2014 in Dubai.

Owners of small business at the conference shared their experiences with banks and complained about high interest rate, problem in opening bank account, closure of account despite maintaining a sufficient balance etc etc.

Vikas mentioned that there is always a cost of service to maintain an account and there are also reasons for high interest rates. Emirates NBD has 80,000 SMEs accounts out of 250,000 total accounts, he informed.

He said transparency in business is very important which lacks in SMEs as sometime they mixed personal and business expenses. Robust financial planning is very important and maintaining transparent financial record, he reiterated.

Alexander Williams, director of the Strategy and Policy Division, Dubai SME, said Dubai is still in early stage. Giving example of Singapore, he said equity financing in Singapore is quite mature. But in the UAE, banks are extremely cautious in SME financing. “We need to develop equity financing here in UAE,” he said.

Mohamed Trabelsi, senior economist at Dubai Economic Council, share details of a recent survey during the panel discussion, Trabelsi said: “More than 700 enterprises were surveyed and the result showed that 83 per cent of them have not access to bank loans in the UAE. We found that collateral standards are very important.” Main requirements of banks is collateral when SMEs apply for bank loan.

Richard Morrison, regional head of Corporate, Direct and Intermediaries, AXA, said: “Growth of SME sector is important and we want to support it. Insurance help encourage lending. We can protect the customers’ assets, trade credit. We can also protect the key of human resources.”

Chris Thomas, chief executive officer of Eureeca, said: “There are many alternatives for SMEs looking for money.

The two-day SME World 2014 opened its doors to investors, businesses and the general public on 26th and 27th March 2014 in Dubai. With the theme ‘Enabling Global Ambitions,’ the conference was held under the aegis of Dubai SME and Dubai Economic Council (DEC) and organized by SPI Group who are known for developing innovative event and content platforms for businesses in the UAE.

Camilla D’abo, Ghislain Desjardins, Vikram Chaddha, Nilanjan Ray and Essam Disi during the panel discussion on ‘Enabling Global Ambitions for SMEs’.

SME World validates the UAE’s commitment to encourage entrepreneurship and to provide a strong ecosystem for small and medium enterprises. It showcased the spirit of entrepreneurship in the UAE and the wider region. In addition to Panel Discussions with experts and industry leaders, the event also hosted SME Workshops.

The event hosted almost 100 top SMEs from across the region. They also showcased their products and services, presented their success stories and shared their growth plans with industry, governments, investors and the general public.

SME World 2014 is sponsored by Emirates NBD, Du and Al Futtaim Motors. It provided some of the best opportunities for business growth in the region by bringing together leading SMEs and entrepreneurs under one roof.


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