Dubai banks team up to provide SME financing options

DUBAI: Emirates Development Bank (EDB) and RAK Bank have signed an initial agreement to offer credit guarantee and co-lending programs for small- and medium-sized enterprises (SMEs) in the UAE.

It allows SMEs to get up to 10 million dirhams ($2.7 million) financing, in which half of the facility will be either guaranteed or co-lent by EDB, the pair said in a statement.

Local citizens can also get up to 1 million dirhams in financing – 60 percent is guaranteed or co-lent by EDB.

“Our MoU with RAKBANK will help in bridging the funding gap for SMEs in key sectors, which will not only strengthen the SME ecosystem but also pave the way for building a robust economy,” EDB chief Ahmed Mohamed Al-Naqbi, said.

It comes as the UAE encourages investment in its industrial sector and raise SMEs contribution to the country’s GDP.

The tie-up follows EDB’s earlier announcement that it is offering direct and indirect lending for SMEs. It also set up an investment arm for startups, as well as business advisory services for entrepreneurs.