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Frequently Asked Questions

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Business Loan FAQs: Your Questions Answered

Here's a comprehensive guide to help you understand the key aspects of business financing in the UAE.

Eligibility and Requirements

A: Your business must have a minimum operational history of one year under the current ownership.

A: A minimum annual turnover of AED 800,000 is generally required. However, this can vary by lender, and some may have different thresholds.

A: Yes, VAT registration is typically a mandatory requirement for a business loan. There may be exceptions, but most lenders require a track record of VAT compliance to assess your financial stability.

A: Loans are available for a wide range of companies, including Mainland companies, Free Zone companies, and Branches of Foreign companies.

Loan Terms & Repayment

A: Loan tenors can range from as short as 6 months up to 5 years. The specific duration you are offered depends on the bank's policies.

A: Repayment is typically done through Equated Monthly Installments (EMIs), which are automatically debited from your company's bank account. Some banks may also allow monthly payment cheques. To calculate EMI, click here

A: Most banks in the UAE calculate interest or profit rates on a diminishing (reducing) rate basis.

A:
• Flat Rate: Interest is calculated on the total principal amount for the entire loan term.
• Diminishing (Reducing) Rate: Interest is calculated only on the outstanding loan balance after each EMI payment. This means the interest you pay decreases over the life of the loan.

Additional Loan Features & Options

A: Yes. You can apply for a new loan even with an existing one. Lenders will evaluate your application based on your company's financial health and its ability to manage additional debt.

A: Yes. POS loans are often unsecured and are typically secured by the future receivables from your credit and debit card transactions, rather than by an asset.

A: Yes. Trade finance solutions like a Letter of Credit (LC) or invoice discounting, as well as certain short-term loans, can sometimes offer lower interest rates. Eligibility for these products depends on various business-specific factors.

A: A loan top-up allows an existing customer to apply for an additional loan amount after a period of timely repayments on their current loan.

A: Yes. Many banks and financial institutions offer buyout options, allowing you to transfer your existing loan from one bank to another, often with more favorable terms or a lower interest rate.

A: Yes, discounts on interest or profit rates may be available and are determined by the bank's specific policies.

Legal and Policy Matters

A: Most banks require an undated security cheque from the company for the full repayable amount. This is a standard procedure and is subject to the bank's policies.

A: Delayed or interrupted repayments can result in legal action against the company and its stakeholders, as per the bank's policy and UAE federal law.

A: Yes, this is an option, but it is subject to settlement charges set by the banks.

A: Any change in signatory or partnership must be updated with the respective bank. It is at the bank's discretion to either accept the change or require the loan to be fully settled before the ownership change is finalized.

Business Bank Account FAQs: Your Questions Answered

Opening a business bank account is a fundamental step for any company operating in the UAE. Here's a clear breakdown of the most common questions to help you get started.

General Requirements

A: This varies by bank and the type of account you choose. While some banks offer accounts with a AED 0 minimum balance, others may require a monthly average balance of AED 25,000 or more to waive fees. Always check the specific bank's policies.

A: The most fundamental requirement is a valid Trade License. This document proves your company's legal existence and activity.

A: Yes. It is a mandatory requirement to provide your bank with a copy of your renewed trade license to ensure your account remains active and compliant.

Account Features & Processing

A: Yes. Most business accounts provide these standard facilities, including chequebooks, debit cards, mobile banking, and internet banking. Availability and any associated charges will apply based on the bank's policies.

A: The processing can begin in as little as one working day, but the full activation time can vary on a case-by-case basis depending on the bank and your company's profile.

A: Yes. To update the signatories on your account, you must directly contact your bank and provide the required legal documents to process the change.

Specific Company Types

A: Yes, offshore companies can open business accounts in the UAE. Availability and any specific charges are subject to the bank's policies and due diligence requirements.
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