- August 6, 2021
- Posted by: admin
- Categories: Blog, Funding trends
To start a business in Dubai, it is not enough to get all your financial support from one source. Sometimes, there are several choices that exist in the market that are easier to raise your start-up capital. There are many options of business funding for startups in Dubai that can give your business a path towards success. These needs differ from business to business and range from buying assets and inventory to paying employees to lease a shop or factory or arranging funds to meet working capital needs. Here are we mentioned a few funding options in Dubai that can be very useful for your foreign business.
Around 50% of the startup companies registered in Dubai and employ half of the city’s workforce. The government of the UAE is committed to turning the country into a new testbed for entrepreneurs and startups to extend and innovate the opportunities of emerging technologies. Over the past two years, they have launched and constantly launch a number of programs to assist and support new business establishments in Dubai.
Here Are Some Business Funding Options for Startup in Dubai
1. Personal Investment
If you think that you have sufficient savings to finance your business, then there is no better choice than this, as you would not have to worry about making a payment of high rates of interest or completing lenders’ requirements. Even if you later apply for loans from bankers and investors, this would prove your commitment to your business when they realize that you have invested a substantial part of your personal savings, and they can approve your loan.
2. Term Loans
It is one of the very usual business funding options available and comes in safe and unsafe forms. Although, the loan serves just like another loan, and the amount sanctioned through it is based on the business and the business owner’s personal credit history. A business term loan may be taken for the specific purpose that you have to convey to the lender while taking the loan. The repayment period of the loan is fixed and usually ranges from one to five years if unsecured term loans, and 15 years for secured loans.
3. Business Line of Credit
A business line of credit acts similar to a credit card and gives you a lot of flexibility. The best thing regarding this is whenever you can borrow according to your needs without going during the long procedure. It means while you apply for a business line of credit you open an account with them, this account would have an upper limit of funds that you are allowed to accept. Now you are free to borrow funds from that approved amount anywhere anytime. The interest charged is only one the amount utilized and not on the total sanctioned amount.
The repayment is easy and can be complete by installments. If you utilize the whole sanctioned amount, you are eligible to again utilize it only when you pay off the entire borrowed amount. Hence, it can be the best method to meet your business needs.
4. Working Capital
Working capital loans offer businesses regular working capital loans that support them to survive in difficult times. The loan comes against collateral and therefore has low-interest rates as compared to other business loans. Although, the loan mostly works similar to a line of credit and hence the interest is collected just on the utilized amount and not on the whole sanctioned amount. But you have end-utilize restrictions here. The bank has a limitation for businesses on using the loan amount just for specific purposes. Therefore, you must have an action plan to utilize the borrowed amount prior to the loan is sanctioned. It also supports you to grow your business in a planned manner resulting in higher profits.
5. Loan Against Property
Obtaining a loan against property for your business is the easiest available option. It is ideal to choose even if you do not have a better business credit history or a bad credit usance ratio. It is because, in such cases, this is tough for the lender to rely on you for repayment in a timely manner. Therefore, giving them collateral from that they may recover their amount guarantees them to lend to you.
Although, for these loans, the sanctioned loan amount is based on the collateral value, and in usual, this ranges between 70-80% of the value of the property. The interest charged for this loan is comparatively less as compared to other business financing options. Although, the title to the property should be clean and free from encumbrance. The mortgaged property must be also free from litigation. The period of this loan is up to 15-20 years.
Also read, Best bank in UAE for business account 2021