Tuesday, 26 May 2015

Securing working capital for your business

Every business needs a little nudge by way of intermediate or preliminary funding. Here’s how you can secure the best type of capital that suits your business needs.

Everybody loves doing business in the UAE. The country has extremely friendly policies that aid the setting up and financing of start-ups, mid-range and even high output businesses. No wonder then that so many businesses are opening up in the UAE with every passing year.
However, every business needs funding at some point. Start-ups may need to accrue capital before they officially launch their business, while on the other hand, mid-size businesses might need a boost with incremental funding to keep their yearly goals on course. Then there are businesses that require working capital to launch a new product or service, or large businesses that need to open a couple of overseas branches.

Fortune favours the brave in UAE
Entrepreneurs in the UAE are spoilt for choice when it comes to securing working capital for their businesses based in the UAE. All banks and financial institutions in the country offer several funding options for businesses to raise initial or intermediate working capital.
However, based on your requirement, you will need to decide which product you must approach your bank for. If you don’t possess adequate information on the subject, simply approach your bank with your requirement and go through their products. The bank will take stock of your business’s financial health, future projections, business developed in the last financial year, your credit score and repayment capacity, among other factors, before recommending a suitable product for you.

The kinds of products you can opt for

Banks in the UAE offer everything from letters of credit to overdraft facilities to help businesses. Some banks also offer working capital to larger businesses which is known as ‘enterprise credit’, provided that business has a minimum sales turnover (in million dirhams).
Normally, businesses can avail of such working capital products as business loans (suited to specific credit needs), overdraft facility (useful for businesses that need cash flows instantly during the course of the working day, such as garment industries, for example), or even mortgages against the office or home space. Businesses operating a fleet of vehicles in the UAE (such as radio taxicabs and goods transport trucks) can also avail of automobile loans aimed at these businesses.
Overall, when opting for a working capital product for your business, study the interest rate being offered, any additional benefits that the bank or financial institution offers you, the documentation you will need to provide, and most importantly, the funds you can independently raise before you sign up for a product with the bank.