On Borrowed Time — Business Banking in the UAE

‘Neither a lender nor a borrower be’, they say. In recent times, private sector companies have found it hard to do the latter, however, since public sector companies have had more access to credit than they have.

Governmental expansion plans and Central Bank of UAE caps may well change all this, making it a good time to start up a business and facilitating credit to small businesses.

Benefiting from business banking in the UAE

When setting up a business in the UAE, you should set up a business account, especially if you’re going to business with firms of companies from other countries. Business account s are much better than personal accounts because you can set aside large amounts of money for investment in your business, make big payments or mass payments easier, and enjoy better terms and conditions on loans and rates on business credit cards.

If you set up your business with an international bank such as HSBC, this benefits you even more. You’ll have maximum cash flow at all times for your business and, as well as online banking, can enjoy face-to-face service and business banking advice.

Getting the credit they deserve

Tremendous news if you’re running a small or enterprise in the UAE, or if you’re planning to start one up: the Abu Dhabi Government has announced a spending programme of 330 billion dirhams (approximately $89.84 billion). The plan includes new developments in Abu Dhabi’s infrastructure and housing sector and comes following a review of its healthcare and education sectors.

And it’s not just the Abu Dhabi Government that has big plans. Dubai’s government is also getting in on the act with plans for a major development that will boast more than 100 hotels, a public garden as big as Hyde Park in London, and the biggest shopping mall in the world.

Although total lending to businesses grew by 1.8% in the first eight months of 2012, lending to the private sector was slow in the first half of the year. Public sector companies so far have enjoyed more opportunities to borrow, but this could all change as the Central Bank of the UAE plans to cap lending by banks to governments and state-related companies. As a result, small private-sector businesses that are supporting state-related companies involved in the governments’ expansion plans can borrow money easier.

Forward thinking

Part of the reason behind this cap on lending has been to weather the effects of the international financial crisis further. This may prove successful as the Central Bank of the UAE has predicted making a profit in 2013.

Meanwhile, the Abu Dhabi and Dubai governments consider small businesses to be the key drivers of economic growth and job creation. That’s why they’ve figured prominently in some of their policies.

It’s clear that governments and financial institutions in the UAE are making a push to let small businesses have their day, by making business banking easier for them. If small businesses can enjoy greater access to credit, they can thrive easier; and if they become more successful, the UAE economy benefits. That’s the plan. If all goes well, then everybody will be happy — especially the businesses themselves, who can both laugh all the way to the bank and borrow from it.

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