Two UAE Banks Sign MoU On Credit Guarantee Scheme for SMEs

The Emirates Development Bank, a key financial enabler of the country’s economic diversification and industrial transformation agenda, and Dubai Islamic Bank – the largest Islamic bank in the UAE and the second largest Islamic bank in the world, have signed a Memorandum of Understanding (MoU) on credit guarantee scheme offered to the small and medium enterprises (SMEs) in the UAE.

The MoU between the two banks reinforce their on-going commitment to support the SME ecosystem and increases their contribution to the nation’s GDP by offering strategic financing solutions. Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB, signed the MoU with Dr. Adnan Chilwan, Group Chief Executive Officer of DIB.
The new scheme provides a solid platform for emerging national companies and entrepreneur to explore new opportunities through innovation such as smart industries and it will assist SMEs and start-ups in the UAE to overcome the financial challenges of accessing funding from the banks.

The platform allows EDB and DIB to increase their financial lending for the SME segment, with a particular focus on priority industrial sectors — namely manufacturing, healthcare, infrastructure, food security and technology.

Supporting SMEs

In an effort to increase the number of SMEs by providing easy financial solutions, and developing the existing SMEs while also establishing a credit history with the banks to allow for sustainable funding in the future, the scheme offers these solutions to SMEs owned 51%-100% by UAE Nationals, all expats in priority sectors such as: healthcare, manufacturing, agriculture and technology while focusing on entities that operate in the country.

Within the scope of the MoU, EDB will provide the credit guarantee program to DIB’s SME customers, while DIB will offer up to $2.72 million financing, with half of the facility amount being guaranteed by EDB. DIB will aim to disburse a total of $54.45 million in financing with a focus on UAE Nationals and priority sectors under this scheme.

Speaking of the MoU, Ahmed Mohamed Al Naqbi, said: “EDB is committed to supporting the UAE’s economic diversification strategy. To achieve this, one of the pivotal steps is to bridge the funding gap for SMEs, particularly those operating in priority economic sectors. EDB is pleased to sign the MoU with Dubai Islamic Bank to facilitate easier access to financial sources for the SMEs, strengthening the ecosystem and supporting UAE’s goals to build a robust knowledge-based economy, and contributing to sustainable economic development.”

DIB Supports UAE Economy

Welcoming the agreement, Dr. Adnan Chilwan said: “DIB has always been an active supporter of the UAE economy, aligning itself closely with the vision of the leadership to nurture and grow the business sector. Cultivating strong and trusted relationships and identifying opportunities to grow the SME ecosystem and has seen us contribute to the on-going success and wealth of the nation.

“Our insight, experience and expertise provide the ideal platform from which to drive the growth of new start-ups and of established SMEs businesses and we welcome the opportunity to partner with EDB on further enhancing our award-winning business banking experience.”

The MoU is aligned with EDB’s recently-unveiled strategy, offering direct and indirect lending for SMEs (Supply Chain, Project and Long-term Finance), an investment arm for start-ups and SMEs (accelerator, equity finance, business growth fund) as well as business advisory services for entrepreneurs, start-ups and small companies ( coaching, consulting, mentoring, market research).

Similarly, DIB’s backing for this initiative complements its broader support for the UAE’s vision of creating a diverse and dynamic SME sector founded on innovation, stability and economic growth.