Emirates Development Bank (EDB), a key financial enabler of the country’s economic diversification and industrial transformation agenda, has signed a Memorandum of Understanding (MoU) with Mashreq Bank, one of the leading financial institutions in the UAE, to provide Credit Guarantee programs for SMEs in the country.
Under the agreement, EBD will provide credit guarantees and co-lending programs to Mashreq Bank’s SME customers, to support with expenses towards activities such as the purchase of equipment and fixtures, construction of work premises, business expansion, purchase of inventory, supplies and raw materials as well as general financing needs for payments such as salaries or rent.
Within the scheme, Mashreq will offer a mix of Capex as well as working capital facilities of up to AED 10million to SME customers, of which 50% of the facility amount will be guaranteed or co-lent by EDB. Additionally, the credit guarantee program also aims to support UAE citizens in their startup journey by offering financing of up to AED 1million, wherein 60% is guaranteed or co-lent by EDB.
The MoU was signed by Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB, and Ahmed Abdelaal, Group CEO of Mashreq Bank.
In his comments on the partnership with Mashreq Bank, Ahmed Mohamed Al Naqbi said: “SMEs are the backbone of UAE’s economy and the government has placed considerable emphasis on developing the SME ecosystem and boosting their contribution to UAE’s non-oil GDP. Our partnership with Mashreq Bank will help facilitate financing through credit guarantee and co-lending options to SMEs and allow greater operational flexibility to the entities. This is part of recently announced EDB’s strategy to enable UAE’s economic diversification and provide financing support to SMEs operating in key sectors.”
On his part, Ahmed Abdelaal, Group CEO, Mashreq said: “SMEs represent more than 94% of companies in the UAE, employing about 86% of the country’s private sector workforce, and generating 52% of the non-oil GDP. Mashreq is delighted to partner with Emirates Development Bank on this initiative, thus ensuring that the UAE’s key value chain drivers; its job-creating SMEs – are provided with better access to financing to meet their operational needs. Supporting businesses has never been as critical as it is now, and we remain focused on providing them with the tools to restructure debt, manage their working capital requirements, and leverage the increasingly dynamic digital eco-system.”
The MoU is part of EDB’s focus to enhance the contribution of SMEs to the country’s GDP. The partnership will focus on providing strategic financing solutions to SMEs – one of the economic pillars of the UAE.
The MoU is aligned with EDB’s recently-unveiled strategy, offering direct and indirect lending for SMEs (Supply Chain, Project and Long-term Finance), an investment arm for startups and SMEs (accelerator, equity finance, business growth fund) as well as business advisory services for entrepreneurs, startups and small companies (coaching, consulting, mentoring, market research).