The Mohammed Bin Rashid Fund (MBRF), which is the financial arm of Dubai SME, and finance platform Beehive have signed a memorandum of understanding (MoU) to aid small and medium-sized enterprises (SMEs) with their financing needs.
The MoU will enable SME owners in Dubai to obtain loans for development and expansion at competitive rates through the Beehive Group Finance Platform.
Abdul Basset Al Janahi, CEO of Dubai SME, explained that the changing SME landscape in Dubai has increasingly led to calls for financing solutions that are more focused on helping businesses on their growth path. He explained that the agreement with Beehive addresses the need for modern SME financing options that can compete with conventional channels and excel in terms of efficiency and cost.
Craig Moore, founder and CEO of Beehive, said banks in the region have traditionally been very “risk averse” and that often acts as a major hurdle for many established businesses that are looking to obtain financing for their growing operations.
“Our targets are businesses that have grown out of their startup stage and can stand on their own feet. For them, the need is access to financing in a timely manner because they don’t want to lose the momentum they have generated. So, generally we are looking at businesses that have already been operating in the market for more than two years.”
“Peer to peer finance is growing rapidly and is estimated to deliver $300 billion globally by 2020. Our partnership will endeavour to provide funding to the pioneering and promising SMEs of the future, which will ultimately help establish Dubai as a world class innovation hub,” Moore said.
Speaking on Beehive’s success in the region, Moore said it had recently crossed the Dh100 million threshold in terms of businesses aided. The platform has also witnessed a 200 per cent growth in the first quarter of 2017, compared to the same quarter last year. This, he said, can be attributed to the wide range of financing options available to suit every business’ needs.
Al Janahi also noted that peer to peer financing is the future of financing for SMEs in the region. This is especially true for SMEs looking for their second or third round of funding.
The agreement, in addition to meeting the requirements of the investor community, also provides them an opportunity to achieve better returns by
financing a qualified group of SMEs.
“It’s an opportunity for UAE nationals who own SMEs to get accustomed to modern financial technologies and leverage the concepts of crowd funding and peer to peer financing without depending on banks or other financial institutions,” Al Janahi said.
“The agreement provides for a credit guarantee of up to Dh500,000 on SME financing for a period up to 36 months with the Fund acting as the guarantor. SMEs will be able to utilise the funds to grow and compete with companies in the domestic market,” said Saeed Matar Al Marri, deputy CEO of Dubai SME.