The Complete Process of Applying for a Business Loan in Dubai, UAE

Step-by-Step Guide to Apply for Business Loan in Dubai

If you are an aspiring entrepreneur and looking for an opportunistic location where you can start your business, there is no better place than Dubai, the UAE. Dubai is the dreamland for all start-ups and international enterprises to start fresh and reach new heights as the UAE has an easy-to-navigate, and follow business registration process and a minimal tax regime. Every year, business people, investors, and entrepreneurs from all across the world land in Dubai to open their businesses in Dubai.
But to start a business in Dubai, you are required to make some investment or have capital. One of the secure and easy ways to get seeding funding is to get a business loan in Dubai.
You can apply for a business loan in Dubai at any bank in the UAE.
If you are an entrepreneur and looking for ways to get a business loan in Dubai to start a new business setup, here is the complete guide to help you in applying for a business loan in Dubai along with all other requirements and documentation you must be aware of.

Who is eligible to apply for a business loan in Dubai, UAE?

Before you approach a bank to apply for a business loan at any bank in the UAE, you must be aware of their qualifying criteria. All the banks in Dubai and the UAE have different types of business loans that offer varied business setups.
Also, remember that a business loan in Dubai for starting a new business can be taken once every four years.
The following are the eligibility criteria all the banks in the UAE consider before offering business loans:

  • Your business must have annual revenue of AED 1 million. Only then you can qualify for the business loan.
  • It would be far easier to get a loan if your company is a subsidiary or branch of any offshore company.
  • Your company age has to be at least one year to qualify for the business loan in Dubai.

What documents are required for a business loan in Dubai, UAE

To apply for a loan for your business in Dubai, you have to prepare all the mandatory documents in advance of the application to make the process easy.
With all the required and necessary documents, getting loans from Dubai banks becomes easier no matter whether you have a big or small business setup.

  • The first essential document is the bank statement which you have to obtain while preparing for a loan application.
  • A bank loan application that you have to fill out completely.
  • Along with this, submit the passport copy of the loan applicant.
  • Past 6 to 12 months’ bank statement
  • If you have partners, you have to submit a memorandum of association (MOA), partnership agreement, power of attorney (POA), and article of association.
  • Submit a copy of the trade license of your company.

The aforementioned documents are requested by all the banks. The following are the documents that can vary from bank to bank in Dubai.

  • Original trade license
  • Copy of tenancy contract
  • Lading bills
  • VAT certificate
  • Transaction invoice
  • The names of employees hired through the ministry of labor
  • Audit report

Also read: How to Open a Business Bank Account in Dubai

The tips to consider while applying for a business loan in Dubai

1: Business loan types

There are various loan types and you have to choose the right one that goes with your business activities. Here are four major types of business loans:

2: Standard business loan

This is the most common type of loan. It works on monthly fixed repayments that you submit for an extended period. And usually, the repayment conditions are fixed unless the loan you have obtained falls under a variable rate.

3: Friends and family business loan

This is the loan you get from your friends or family. The loan can be returned in one go or can expand over a period of time.

4: Credit card loan

By using a credit card, you ask for advanced loan funds. You just know that this type of contract can ask you to pay interest since credit card rates have high interest.

5: Backed loan from the small business association (SBA)

This loan is supported by the government and this can be a reliable option if your loan applications have been rejected by many banks.
However, this loan category requires you to be in compliance with the repayment terms. And in case of violation, there can be strict penalties.

6: You must be familiar with Islamic finance concepts in Dubai

Islamic finance is the regime most banks in the United Arab Emirates follow. Islam is the official religion of the country and there are Islamic laws and regulations related to business and business loans.
As per Islamic finance principles, all the financial activities and investments of any firm have to be compliant with sharia.
The interest is prohibited under Islamic law.
Along with the investments that are compliant with sharia, money also has to be earned through lawful trade.
The procedure of Islamic finance is different from the regular finance system. You must know that the concept of profit and loss sharing in Islamic finance is divided into many contracts.
The most known contract is known as mudarabah. According to the mudarabah, the percentage of profit and loss is decided by the investor and the business person. The investor has to bear all the burden of loss.
Whereas in the traditional financial system, the investor can demand the interest and the business person has to pay interest regardless of whether the company’s financial condition is not profitable.
So, if you are looking for sufficient initial capital to finance your business in Dubai, obtain your business loan in Dubai with us.

Also read: Opening A Bank Account in Dubai

Business loan in Dubai

Business loans provide ease of doing business. It is important to follow all the documents and financial requirements to apply at banks for a business loan. With that, understanding the concept of Islamic finance in Dubai is also important. One small error and the bank will reject your application.
To avoid that, contact us at Vigor business setup. Our consultants are well-educated on tax policies and all other operational aspects of obtaining a business loan in Dubai. The assistance of Vigor consultants can prove to be helpful if you are confused with the legal procedure of business loans.