According to statistics from the Central Bank of the UAE, banks in the UAE gave small and medium-sized businesses US$25.4 billion (AED93.4 billion) in the first quarter of 2020—4.3 percent more than the loans given out in the fourth quarter of 2019.
These loans made up around 8.1 percent of the total cumulative balance of credit facilities—this is accounting for all private-sector commercial and economic activities in Q1 2020.
If you’re looking to strike out on your own and start a business, you may have looked into the prospect of taking a business loan.
But to successfully do so, you have to avoid these common mistakes at all costs:
Neglecting to Compare Loans
Once you’ve made the decision to apply for a loan, you can’t just opt for the first lender you approach. Approach a variety of lenders and evaluate their offerings before making your decision.
A business loan is a substantial investment that you will have to commit yourself to, whether you like it or not. Hence, going over all your options before settling on a loan is always the wisest path forward.
Poor Liquidity Score
Lenders assess your liquidity score in order to determine your eligibility for the loan. Your liquidity score generally involves the cash you have on hand, as well as the cash you have in the bank. If your liquidity score isn’t high enough, you will not be eligible to receive a loan because your ability to pay the debt will be compromised.
Not Preparing a Practical Business Plan
When approaching a bank or a lender for a business loan, make sure you’ve formulated a formal business plan that outlines the steps you’ll have to take to develop your business, as well as how the loan will positively impact your business.
Include the operating costs, the revenue, and the growth of your business clearly and concisely.
Possessing Zero Collateral
Lenders and banks don’t like risks when it comes to providing business loans, so they don’t prefer handing out unsecured loans. This means that you’ll need to identify your business and personal collateral in order to secure a loan. Collateral works as an insurance policy that provides the bank or lender with an asset in the event of business failure.
If you’re ready to take out a business loan, we can help you get started.
We can help you find the right option based on your preferences! Whether you’re looking for a business loan, auto loan, cashback credit cards, debt consolidation, salary transfer loan, or credit card settlement options, we’ll connect you with the best providers in Dubai, Sharjah, Abu Dhabi, and Ajman.
Call (+971) 528-651530 for more information, and we’ll take it from there!