With its alluring duty strategies and simplicity of carrying on with work, Dubai is an optimal area to set up another business adventure. Assuming you are hoping to acquire adequate funding to back your new business setup, you can decide to apply for different sorts of business credits. Getting this financing is a venturing stone towards effectively beginning a business in Dubai and guaranteeing its endurance.
This blog will direct you through the top ways to apply for business credit in Dubai.
Check If You Are Eligible To Apply For a Business Loan
Numerous independent ventures are qualified for business credit, provided that they meet the qualification standards. The particular prerequisites vary from one bank to another in the UAE. Nonetheless, all banks have these base necessities:
- The business should be running for something like 2 years
- Least yearly turnover (sum fluctuates per bank)
- Business or individual bank proclamations for the last 6 to a year
Choose The Right Type Of Business Loan
You can consider various types and amounts of business loans. Below we break down the benefits of 4 key types of business loans:
A Standard Business Loan
- Fixed monthly repayments over an extended period of time
- Payment terms are typically fixed unless the loan is under a variable rate
Friends and Family Loan
- Directly approaching friends and family for a loan
- Payment terms are more flexible and can be amended easily
- The risk of losing relationships over the repayment
Credit Card Loan
- In the form of advance funds through a credit card
- Typically 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 have been unsuccessful
- If payment terms are not met, the government may impose harsh penalties
Familiarise Yourself With The Concept of Islamic Finance in Dubai
What is Islamic Finance?
Islamic Finance alludes to every one of the monetary exercises and speculations that are agreeable with Sharia, which is the term for Islamic Law. A portion of the center standards under Islamic Finance include:
- Acquiring revenue through the loaning or getting of money is taboo
- Cash should be acquired through authentic exchange and speculation of resources
Cash should be spent in useful ways
How Does Islamic Finance Differ from Traditional Finance?
Because of the way that interest is precluded under Islamic Law, Islamic Finance subsequently follows the idea of benefit and misfortune sharing under an agreement. There is a wide range of sorts of agreements, yet one of the most well-known will be known as mudarabah. Under this agreement, it is obviously determined how the benefits and misfortunes will be split between the financial backer and business visionary. Moreover, the financial backer will bear the weight, all things considered. Then again, conventional money directs that the business person's requirements pay revenue no matter what the organization's monetary position.
The Bottom Line
Each business loan has its own risks. Therefore, there is no clear right or wrong option. Instead, it is important to evaluate what loan characteristics you value more and will help your business succeed. Being well informed and prepared for the application process can make the process much easier.
We at JAFZA free zone are here to help you with the setup of your new business venture and ensure that you are on the right track to success. Reach out to us now to see how we can help you!
