5 things to know when applying for a small business loan, not only in Dubai

Citibank, Dubai, business loanIt’s relatively easy to borrow money as a personal or corporate loan in Dubai. You will need a job with a regular salary or several months, at least, of company accounts and bank statements, in case you are self employed. Maximum loan amount will be up to 10-24 times your monthly salary/income. Or you need a good statement in case of a company. Here you are some useful tips.

It’s relatively easy to borrow money as a personal loan in Dubai. You will need a job with a regular salary or several months, at least, of company accounts and bank statements if self employed. Maximum loan amount will be up to 10-24 times your monthly salary/income.

1. Don’ t be scared

Arranging your finances for a new business venture can be daunting – especially if you’ve got a history of bad credit. But don’t let it put you off. Just because you haven’t had a good record in the past doesn’t mean it has to stop your current business ambitions. There’s no reason to fear you’ll never obtain a small business loan in the UAE. Today’s lending environment is much more open to lending credit that is less favourable, than it ever has been before. You should apply for exactly what you need and not be scared of trying for the full amount you need because you think you’ll get a better chance of securing a smaller loan. Which brings us nicely to the next point…

2. Use a loan calculator

You can work out exactly how much you can realistically lend against what you can afford to pay back by using a loan calculator. Most banks have these on their websites and it’s a good way of working out what exactly what you can apply for. Another tip is to consider how much money you really need your business to grow each month compared with how much you can realistically afford to pay back – the first thing lenders will do is check that you can actually afford to make repayments. So while you shouldn’t be scared to go for the full amount needed, this should already be worked out by you to an amount that you know you can afford to pay back.

3. Try to be organised

Try to have everything already prepared in advance of your application – even mentally. If you know the answers to the questions that you’ll be asked, it’ll save you time trying to get everything in order later on. Have all of the necessary documents and paperwork ready as soon as you find out what they are, and this should help speed up your application. Show awareness of potential goals and growth for your business too so the lender knows you are responsible and prepared for the realistic challenges of running a new business.

4. Look at the charges

You should try to make sure you’re aware of all the rates and charges applicable to any loan so you’re not hit with unexpected charges or loopholes. You can compare interest rates against a variety of bank loans before you decide, and also check out the late payment fees to see what you’re likely to be charged if you miss any payments for whatever reason. Try to be aware of the following before signing up as well: do you know whether the loan has a flat interest rate or reducing rate? A flat rate is based on entire loan amount without calculating what’s been repaid already, while a reducing rate is interest on the outstanding balance, after considering those repayments already made.

5. See what help is offered

Starting a business is unpredictable – you don’t know whether it is going to go one way or another; your profits might be better than you expect, or there might be occasions where you struggle. So taking a look at what you’re entitled to either way is a good idea. If you find can repay your loan earlier than expected then it’s definitely a good position to be in, but you may need to pay a penalty for doing so. However, it’s better for you if you can do this as you can save a chunk of money – plus these days some banks offer 1% or even 0% deals in some cases. Another nice perk to have as part of your small business loan is a payment holiday, which is a good asset for instances where you know you’ll struggle to make the repayment that month. Most banks in the UAE do offer this but you will need to apply in advance and pay a small charge.

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