EDB allocates Dhs30 million to finance SMEs

Emirates Development Bank (EDB) on Sunday announced that it has signed an agreement with Beehive, the UAE’s first Peer-to-Peer (P2P) platform, to expand funding options for the Small and Medium-sized Enterprises (SMEs).

The announcement follows EDB’s strategic pledge to support SMEs, startups and corporates across five priority sectors including manufacturing, healthcare, infrastructure, food security and technology over the next five years.

As an institutional investor, EDB has initially assigned Dhs30 million funding via the Beehive platform to qualifying businesses. Beehive, in turn, will facilitate business loans to creditworthy SMEs looking to expand operations or improve working capital.

The funds disbursed through this partnership have the potential to support hundreds of SMEs in the region, reinforcing the bank’s new strategy to increase financial accessibility to Emirati and UAE resident-owned SMEs and businesses.

The EDB strategy aims to help SMEs to access finance and grow their business, which should boost their contribution to UAE’s non-oil GDP to over 70 per cent by 2021, besides enhancing in-country value, productivity and employment.

Commenting on the partnership, Ahmed Mohamed Al Naqbi, CEO of EDB, said, “The collaboration with Beehive is part of our mission to bridge the funding gap by offering SMEs greater and easier access to financial sources. Through our combined efforts, we look forward to strengthening the SME ecosystem and supporting the UAE’s goals to build a robust knowledge-based economy.”

For his part, Craig Moore, Founder and CEO of Beehive, said, “The addition of institutional investors to Beehive will give SMEs more secure financing and better liquidity on the platform, which means that funding can be received faster too.”

The Beehive platform uses crowdfunding technology to connect SMEs looking for finance with a crowd of investors who can support their finance request, whilst earning attractive returns. In addition to its network of retail investors, Beehive has adapted its business model to include institutional investors to increase liquidity and the speed of funding for its businesses.

Earlier the Emirates Development Bank (EDB), fully owned by the UAE Federal Government and a key financial enabler of the country’s economic diversification and industrial transformation agenda, has signed a Memoradum of Understanding (MoU) with Commercial Bank of Dubai (CBD) to offer Credit Guarantee and Co-lending programmes for SMEs in the UAE.

The MoU is part of EDB’s commitment to support the goals of the National Agenda under the UAE Vision 2021, focused on boosting the SME ecosystem in the UAE as well as enhancing the contribution of SMEs to the country’s GDP. The partnership will focus on providing strategic financing solutions to SMEs – one of the economic pillars of the UAE.

Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB, signed the MoU with Dr Bernd van Linder, Chief Executive Officer at CBD.

As part of the MoU, EDB will provide the Credit Guarantee or Co-lending programme to CBD SME customers. Within the MoU scope, CBD can offer up to Dhs 10 million financing to a SME, and 50 per cent of the facility amount will be either guaranteed or co-lent by EDB. For its part, CBD will provide SMEs with an innovative and convenient Digital Business account, which can be opened digitally and in real time. Moreover, CBD will also offer a wide range of loans including Trade and Working Capital finance, loans against POS as well as asset backed lending solutions.

The programme also aims to support UAE citizens in the startup journey by offering financing facilities of up to Dhs1 million, wherein 60 per cent is guaranteed or co-lent by EDB.

Speaking of the MoU, Ahmed Mohamed Al Naqbi, said: “As part of the EDB’s endeavour to play a pivotal role in the country’s economic diversification plans, and bridging the funding gap for SMEs operating in key sectors, we are pleased to sign the MoU with Commercial Bank of Dubai. Through our combined efforts, we look forward to extending easier access to financial sources, strengthening the SME ecosystem and supporting the UAE’s goals to build a robust knowledge-based economy.” In his comments, Dr Bernd van Linder, said: “Our agreement with the Emirates Development Bank is a perfect example of public and private sectors partnering to support SMEs - a vital contributor to the economy of the UAE.

CBD has always been keen to promote the overall business environment in the UAE and support SMEs and start-ups by providing them with innovative financial solutions to manage their finances and get the best banking solutions through a seamless and smooth user experience.” The Credit Guarantee and Co-lending programme provides a robust platform for EDB and CBD to increase their financial lending for the SME segment, with focus on the priority sectors.