The United Arab Emirates’ economy largely depends on the success of its small- and medium-sized enterprises. With the recent exodus of mainstream banks from the UAE in recent years, non-traditional financers have been left to fill the gaps in SME funding.
According to some reports, these lenders are succeeding in their efforts. Abu Dhabi Finance is one such financer that reported new spikes in small business lending. In its first quarter earnings report, ADF reported a 60 percent year-on-year increase for small business mortgages. According to ADF, the numbers are the result of more small business owners buying commercial real estate.
Businesses are also borrowing a greater volumes. According to the lender, the average size of their commercial loans is now nearly half a million dollars.
According to ADF CEO Chris Taylor, the figures represent an increased appetite among SMEs for loans after historically facing a challenging market. But today, lower rents and increased commercial space are propelling small business loans, suggesting overall positive economic health for the nation.
“SMEs are the engines for economic growth and a vital contributor to the UAE’s non-oil GDP,” Taylor said. “So, it is an encouraging sign that the commercial property market is beginning to open up and mature, with more and more SMEs buying property.”
Small business lending is gaining traction within other lenders, too. One of the UAE’s first online P2P lending platforms, Beehive Group, recently held a roundtable to discuss the rise of alternative lending in the nation and the financing gap that exists in today’s market.
That gap, some experts say, is due to the departure of several mainstream banks from the UAE market, including HSBC, Lloyds Bank, RBS and Standard Chartered. While this exodus has left SMEs largely underserved, experts said, it has also opened the doors for local and alternative lenders to step up to the plate.
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