Thanks to Dubai’s distinctive tax policies that facilitate the process of doing business, Dubai is an ideal location for setting up your new business or opening one of your branches. If you are looking to get enough capital as financing to grow your business, You can apply for a different type of commercial loan, according to your desire and the nature of your business in Dubai. Securing this financing is a stepping stone towards starting a successful business in Dubai and ensuring its continuity and achieving satisfactory results that meet your aspirations.
Therefore, in this article, we will show you the most important tips that will guide you properly to apply for a commercial loan in Dubai for your project or business in simple and easy steps:
The first step: You must check if you are eligible to apply for a business loan for your project
Many small businesses qualify for a business loan, But only if they meet the eligibility criteria. Specific requirements vary from bank to bank in the UAE. However , All banks have minimum requirements, which are:
The business must last for at least two years.
Minimum annual trading volume (the amount varies for each bank).
Personal or commercial account statement for the last 6 to 12 months.
The second step : Choose the right type of business loan:
You can consider different types and amounts of business loans. Below we break down the advantages of 4 main types of business loans:
Standard business loan
fixed monthly installments over a long period of time, Payment terms are usually fixed unless it is a variable rate loan
Friends and family loan
Approaching friends and family directly to obtain a loan
Payment terms are more flexible and can be modified easily, The risk of losing relationships due to repayment
credit card loan
in the form of advance funds through a credit card, It usually charges very high interest rates.
Small Business Association (SBA) Backed Loan
supported by the government, This is a good option when your bank loan applications are not successful, If the payment terms are not met, The government may impose harsh penalties.
The third step : Learn about the concept of Islamic finance in Dubai
What is Islamic finance?
Islamic finance refers to all financial activities and investments that comply with Islamic law. It is the term of Islamic law. Some of the basic principles within the framework of Islamic finance include:
Earning interest by lending or borrowing money is prohibited.
Money must be earned through legitimate trading and asset investment.
Money should be spent in productive ways.
How is Islamic finance different from conventional finance?
Due to the fact that interest is prohibited by Islamic law, Islamic finance follows the concept of sharing profits and losses under the contract. There are many different types of contracts, But the most common of them is speculation. Under this contract , How to divide profits and losses between the investor and the businessman has been determined. Furthermore it , The investor bears the burden of all losses. and on the other hand, Conventional financing forces the entrepreneur to pay interest regardless of the company’s financial position.
The fourth step : Prepare the correct documents.
The following are common documents that banks require when applying for a business loan
Bank statements from the past 6 to 12 months
A completed bank application form
Articles of Association / Articles of Association (MOA) / Power of Attorney (POA) / Partnership Agreement
Copy of your trade license and original document for endorsement
A copy of the loan applicant’s passport
Owners housing lease contract or housing sharing letter
Large transaction bills
Value added tax certificate
List of employees obtained from the Department of Labor
Shipping bill, if any. Trade license
We are a mastering company to establish and keep pace with emerging and advanced projects in Dubai, United Arab Emirates, and we are here to help you prepare your new business project, adjust its legal standing, and assist you in administrative matters, in addition to advice from experts that help in the success of your business in a nutshell and make sure that you are on the right track towards success. For any inquiries, contact us now. we’re waiting for you .
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