Dubai – MENA Herald: According to stats from the UAE’s top finance comparison site compareit4me.com, recent figures show a 115 percent increase in the number of consumers searching for business loans on the site between January and March of this year, compared with the same period last year.
Currently in the UAE, SMEs contribute an estimated 40-46 per cent of nominal GDP in Dubai, and more than 60 per cent of the UAE’s GDP. They host the majority of employment opportunities in the country and provide 86 per cent of all private sector employment.
The latest figures from compareit4me.com indicate that SME growth in the country is continuing and that more and more businesses are looking to the banks to secure financing at sustainable rates.
compareit4me.com CEO Jon Richards comments, “It’s certainly good news for the UAE economy, but it wasn’t that much of a surprise to us. The UAE has always been a fantastic place for entrepreneurs to launch start-ups and, with the development of more free zone areas and business hubs, offering more stability, more support and less risk for SMEs, this continues to be the case.”
Additionally, the UAE government recently initiated a bankruptcy policy to protect SMEs, buffering them with a 90-day grace period before legal action can be taken against them, offering even more stability for start-ups. Commenting on the policy, Mubarak Rashed Al Mansouri, governor of the Central Bank said, “We need to offer institutional support to SMEs to better deal with market forces and offer them credible credit guarantee scheme in order to decrease risks of default.” He added, “We are pressing ahead with the bankruptcy law for the stability of the SME sector, I hope this will bring about more confidence in the sector.”
The UAE currently has approximately 300,000 SMEs with the sector accounting for about 5 percent of total lending from banks and 6 percent of bank deposits.** Richards says, “There is an excellent range of banking products available, with banks adding additional constantly look at and adding to their portfolio of products aimed at SMEs. However, there is still huge opportunity for banks when it comes to SME offerings.”
He added: “At the same time, entrepreneurs need to remember that banks aren’t venture capitalists; as a start-up, you can’t expect banks to fully fund your business idea. However, not only is the venture capital market on the rise in the UAE**, but also peer-to-peer lending and crowd-sourcing opportunities are more easily accessible now than they were in the past. So SMEs and start-ups have a wide range of funding options.”
In addition to a marked increase in the amount of consumers searching for business loans, the leading finance comparison site also recorded massive growth both the number of car loans and the number of current accounts obtained through the site. Both have tripled in the same period.