• 08-09-2021
  • maveric

Financing options for starting a business setup in Dubai

Any new venture needs money to succeed. The amount of money your business makes in the long run is decided by how well you manage your finances from the outset. As a result, cash, or the first investment, is the most important part of the startup cycle.

Any entrepreneur who has created a business setup in Dubai will tell you that one of the most exciting aspects of their job is identifying – and selecting– the best funding option for their company. Startups and small and medium businesses confront a slew of issues, including a scarcity of venture capital and high interest rates on bank loans (SMEs). Thankfully, Dubai's entrepreneurial ecosystem offers a wide range of finance options.

1. Use Your Savings

If you've lived in the UAE for a long, you've probably saved some money that you can put to good use right away. If you have adequate savings in your bank account, you are good to go, depending on the expected original cost of your firm.

2. Venture Capital

Another possible source of finance for your small business is venture capitalists (VC). These are private equity investors that are willing to put up substantial sums of money despite high risks since they stand to benefit a lot if the companies they back succeed in launching and maintaining their operations.

Having angel investors on board is equivalent to having this form of finance. When they have a corporate sponsor, agent, or business setup consultancy presenting them, most business owners feel more confident in partnering with venture capitalists. Being one of the top business setup consultants in Dubai, UBL Business setup can assist you in finding the perfect angel investor options.

3. Institutional Investors

Obtaining a loan from local institutional investors to start a business in Dubai or anyplace else in the UAE is also an option. Institutional investors are businesses that have control to other people's money and use it to invest in various projects.

Although banks are the most well-known institutional investors, other firms such as insurance companies and mutual funds also offer business financing. Know more about your funding options from professionals at UBL business setup.

4. Crowd Funding

Peer-to-peer financing is one of the most effective ways to find the right investor for your business setup in Dubai. This is a sort of debt financing that permits you to borrow and lend money without the involvement of a bank. You can know more about crowd funding and peer-to-peer funding options from our experts. Get a free business consultation and find out how you can pool money for your new business.

5. Angel Investors

If crowd-funding isn't working, go out to angel investors, such as high-net-worth individuals, family offices, or entrepreneurs eager to diversify, mentor, and give back by investing in potential startups. This is one of the easiest methods to receive funding because it usually requires less documentation and a simpler funding process.

Finding the proper angel investor, on the other hand, is difficult since it takes in-depth knowledge of reputable angel investors in the UAE, or at the very least, a local partner with sufficient resources to search for and communicate with such investors.

6. Bank Loans

Mostly all major banks in the UAE provide attractive lending options for startups and entrepreneurs. Any bank where you have a current account, as well as new banks, can offer you a number of possibilities. Flexible payment plans ranging from a few months to two years are available. Aside from traditional startup loans, there are other startup funds administered by local banks that you should be aware of. Know more about various bank loans and funds for business assistance from our experts.

7. Ask Friends or Family

It can be intimidating to ask relatives and friends for money. However, before seeking outside funds, tapping those closest to you is a good starting step. Prepare a business plan before approaching them.

Explain what you're offering, how you'll make it, any demos, prototypes, or samples you have, prospective sales, risk considerations, rivals, and how you'll generate money throughout the plan. As the relationship is important, be realistic and honest in a way they will understand. Indicate if you're requesting a loan, an investment, or a gift.

8. Business Incubators

When it comes to the initial investment, training, and assistance to establish a business, Dubai is known for its specialized areas for entrepreneurs. Incubators and accelerators in Dubai not only offer paid services if you need them, but they also have funding available to help you get started.

You will have a hard time pitching the proposal if you want to create a more traditional business, such as trading food supplies. If you have no prior business expertise, we generally do not advise you to begin with funding. Before you begin looking for investments, you must first learn the ropes. As previously said, traditional businesses are difficult to pitch to investors until some know-how is introduced. As a result, most business owners in the UAE seek funding from local banks.

Initially, entrepreneurs seek out banks that offer bank loans to startups and small to medium-sized businesses. Currently, Emirates NBD, ADCB, and RAK Bank are a few banks that offer SMEs and Startups business loans. Keep in mind that you may wish to conduct your own research on multiple institutions, examining essential elements like interest rates, collateral, and even repayment terms. This will allow you to select the bank that best meets your company's requirements.

It is a commonly known fact that securing a bank loan for a small business or startup in the UAE can be quite tough. You should also be aware that most start-ups fail within the first few years, thus banks would be taking a tremendous risk by accepting start-up applications. As a result, before applying for any bank funding for your business setup in Dubai, you must have a few years of successful operations behind you, a strong credit history, a certain turnover, and demonstrate how you will repay the loan.

Enjoy free business consultation from the best business setup consultants in Dubai and kick start your business with the smoothest launch.