ABU DHABI- Emirates Development Bank (EDB), a key financial enabler of the country’s economic diversification and industrial transformation agenda, has signed a Memorandum of Understanding (MoU) with Mashreq Bank, one of the leading financial institutions in the UAE, to provide Credit Guarantee programmes for SMEs.
Under the agreement, the EBD will provide credit guarantees and co-lending programmes to Mashreq Bank’s SME customers, to support them with expenses towards activities such as the purchase of equipment and fixtures, construction of work premises, business expansion, purchase of inventory, supplies and raw materials as well as general financing needs for payments such as salaries or rent.
Within the scheme, Mashreq will offer a mix of Capex as well as working capital facilities of up to AED10 million to SME customers, of which 50 percent of the facility amount will be guaranteed or co-lent by EDB. Additionally, the credit guarantee programme also aims to support the UAE’s citizens in their start-up journey by offering financing up to AED1 million, wherein 60 percent is guaranteed or co-lent by EDB.
The MoU was signed by Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB, and Ahmed Abdelaal, Group CEO of Mashreq Bank.
In his comments on the partnership with Mashreq Bank, Ahmed Mohamed Al Naqbi said, "SMEs are the backbone of the economy and the government has placed considerable emphasis on developing the SME ecosystem and boosting their contribution to the non-oil GDP. Our partnership with Mashreq Bank will help facilitate financing through credit guarantee and co-lending options to SMEs and allow greater operational flexibility to the entities. This is part of the EDB’s recently announced strategy to enable economic diversification and provide financing support to SMEs operating in key sectors."
Ahmed Abdelaal, Group CEO, Mashreq said, "SMEs represent more than 94 percent of companies in the UAE, employing about 86 percent of the country’s private sector workforce, and generating 52 percent of the non-oil GDP. Mashreq is delighted to partner with Emirates Development Bank on this initiative, thus ensuring that the UAE’s key value chain drivers; its job-creating SMEs - are provided with better access to financing to meet their operational needs. Supporting businesses has never been as critical as it is now, and we remain focused on providing them with the tools to restructure debt, manage their working capital requirements and leverage the increasingly dynamic digital eco-system."
The MoU is aligned with the EDB’s recently-unveiled strategy, offering direct and indirect lending for SMEs (Supply Chain, Project and Long-term Finance), an investment arm for start-ups and SMEs (accelerator, equity finance, business growth fund) as well as business advisory services for entrepreneurs, start-ups and small companies (coaching, consulting, mentoring, market research).
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