Emirates Development Bank (EDB), and Abu Dhabi Commercial Bank (ADCB), have signed a Memorandum of Understanding (MoU) to boost the financial inclusion of small-to-medium-sized enterprises (SMEs) through a joint credit guarantee scheme.
The partnership will enable SMEs in the UAE to have improved access to strategic financing options. Under the credit guarantee scheme, EDB will guarantee up to 50 percent of the finance facility extended to SMEs by ADCB. The scheme is in line with EDB’s mandate to provide $8.2 billion in financing for the development of the UAE economy in 5 strategic sectors, of which $1.4 billion are to be allocated through credit guarantee schemes.
“EDB is dedicated to growing the UAE economy by supporting the sustainable development of our nation’s SME ecosystem. We are pleased to welcome ADCB to our expanding group of commercial bank partners with whom EDB pursues the shared goal of improving access to financing for SME businesses contributing to the UAE’s non-oil GDP. Through this MoU, EDB will help fill critical lending gaps and provide solutions tailored to financing the growth of the SME sector.”
Mr. Saoud Mohammed Al Jassem, Government Clients Division, ADCB, said that “ADCB is committed to providing SMEs with comprehensive banking solutions for their operational and strategic ambitions as they are the backbone of the UAE economy, they represent more than 90 percent of the total companies operating in the country and generate more than 50 percent of the UAE’s non-oil GDP. This partnership with EDB will enable us to unlock more funding for the nation’s SME community and expand our support for the government’s ‘We the UAE 2031’ strategy and the ‘National Agenda for Entrepreneurship.”
In the first 9 months of 2022, EDB approved $354 million in loans to SMEs, comprising $220 million in direct financing and $132 million in indirect financing through EDB’s credit guarantee scheme with partner commercial banks.
EDB also recently announced a new digital lending feature offered in partnership with peer-to-peer (P2P) lending platform Beehive that allows SMEs to apply for loans of up to $1.4 million and receive approval or feedback within five days. The lending service is available for UAE-based SMEs operating in EDB’s five priority sectors, manufacturing, healthcare, food security, advanced technology, and infrastructure.
Beyond financing, EDB offers SMEs a digital banking solution in the form of its “Business Banking” app which allows businesses to register and receive an IBAN within 48 hours.