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  • Writer's pictureBrent Yap

Financing your Business in the United Arab Emirates

The UAE Laws Series. 24 April 2023


As you may already be aware, the United Arab Emirates (UAE) is a major financial hub in the Middle East region with a thriving economy and various funding options that businesses can leverage to finance their operations. For a start, to support the growth of the startup ecosystem, the UAE government and private organizations have launched several funding initiatives aimed at providing financial assistance to startups and entrepreneurs. In this article, we will look at the common ways businesses are funded in the UAE, the challenges facing borrowers, and alternative funding options including the rise of cryptocurrency usage as a funding tool.

1. How Businesses are Commonly Funded

Below are some of the most common ways companies in the UAE fund their businesses:

a. Bank Loans: Banks in the UAE offer a range of financing options, including term loans, working capital loans, and trade finance facilities. These loans are available to companies and businesses with a strong financial standing and creditworthiness. The loan amount and interest rates are usually determined by the borrower's credit score, financials, the purpose of the loan, and other factors.

b. Venture Capital: Venture capital firms invest money in start-ups or early-stage companies with high growth potential. In return, they usually get equity in the company. The UAE has a growing venture capital industry, and several venture capital firms are willing to invest in promising businesses.

c. Angel Investors: Angel investors are wealthy individuals who provide capital to start-ups and early-stage companies. They usually do so in exchange for equity in the company. Angel investors in the UAE are often looking for companies with a unique business idea, a competent management team, and good growth potential.

d. Alternative lenders: In addition to traditional banks, there are several alternative lenders in the UAE that provide financing to small businesses. These lenders have more flexible lending requirements and may be willing to lend to businesses with lower credit scores or without collateral.

e. Crowdfunding: Crowdfunding is becoming increasingly popular in the UAE as a way for businesses to raise capital. Crowdfunding platforms allow businesses to raise funds from a large number of people who can each invest small amounts. Examples of crowdfunding platforms available in the UAE include Eureeca and Beehive.

f. Initial Public Offering (IPO): Companies in the UAE can raise capital by offering shares of their company to the public through an Initial Public Offering (IPO). This is a popular way for large corporations in the UAE to raise capital to finance their expansion plans. Examples of companies in the UAE that have gone public through an IPO include Emaar Properties and Dubai Islamic Bank.

Despite the options above, many individuals and businesses in the UAE may still encounter difficulties in obtaining loans and financing from banks and other financial institutions when first venturing into the emirate.

2. Reasons Why Obtaining Loans in the UAE Can be Difficult

Lack of Credit History: One of the main reasons why obtaining loans in the UAE can be difficult is the lack of credit history. Many banks in the UAE require a credit history, particularly for personal loans. However, many expats and even some Emiratis may not have a credit history in the UAE or their home country, which can make it difficult to obtain loans.

High Debt-to-Income Ratios: The UAE has a high cost of living, and many individuals have high debt-to-income ratios. This can make it difficult to obtain loans as lenders may view them as higher-risk borrowers.

Stringent Borrowing Criteria: Many banks in the UAE have stringent borrowing criteria, which can make it difficult to obtain loans. For instance, banks may require collateral or security for the loan, which can be difficult for individuals and businesses to provide. Other factors for consideration include providing information such as minimum turnover requirements, certain number of years in business, and having a good credit score.Banks may also have strict income and employment requirements, which can make it difficult for some individuals to qualify for loans.

High Interest Rates: The interest rates on business loans in the UAE can be relatively high compared to other countries. The UAE Central Bank sets a cap on interest rates, but banks can still charge high rates, particularly for unsecured loans. This can make it challenging for businesses to access affordable financing.

Lengthy Approval Processes: The approval process for business loans in the UAE can be lengthy, and businesses may have to wait several weeks or even months for a loan to be approved. This can be a significant challenge for businesses that need funding quickly to meet their operational needs.

Finally, the economic situation in the UAE also plays a role in getting loans. Due to the decline in oil prices, UAE banks are reluctant to lend money to businesses, especially those in the oil and gas sector that have high levels of debt and a low return on investment.

3. Suggestions to Get Financing in the UAE

To increase your chances of obtaining loans in the UAE, you can start by building your credit history. You can do this by getting a credit card, using it responsibly and paying your bills on time. You can also take out a small personal loan and pay it back on time to establish a repayment history.

One useful suggestion is to establish a relationship with the bank or financial institution. This can involve opening a bank account, making prompt payments on bills and loans, and building up some liquidity. Further, to improve your debt-to-income ratio, you can prioritize paying off high-interest debt, such as credit cards. You can also negotiate with lenders to restructure or consolidate debt to make repayments more manageable.

Other existing funding initiatives are the following:

Government Support Programs:

The UAE government has launched several programs aimed at supporting startups and entrepreneurs. These programs provide financial assistance, mentorship, and other resources to help startups and entrepreneurs succeed.

a. Khalifa Fund for Enterprise Development: The Khalifa Fund for Enterprise Development provides financial assistance and support to Emirati entrepreneurs and small businesses. The fund offers several financing options, including loans, grants, and equity investments, and provides support in the form of mentorship and business development services.

b. Dubai SME: Dubai SME is a government agency that supports the development of small and medium-sized enterprises (SMEs) in Dubai. The agency provides financing through its Business Support Fund, which offers loans to SMEs at competitive interest rates.

c. Dubai Future Accelerators: Dubai Future Accelerators is an initiative launched by the Dubai Future Foundation to support startups working on futuristic technologies. The program provides startups with access to funding, mentorship, and collaboration opportunities with government entities.

Private Funding Initiatives:

In addition to government support programs, we have look earlier look at several private funding initiatives in the UAE aimed at supporting startups and entrepreneurs which are :

a. Venture Capital Firms: Venture capital firms provide funding to startups in exchange for equity. There are several venture capital firms in the UAE, including BECO Capital, Wamda Capital, and Middle East Venture Partners (MEVP), that provide funding to startups across various sectors.

b. Angel Investors: Angel investors are individuals who provide funding to startups in exchange for equity. There are several angel investor networks in the UAE, including the Dubai Angel Investors Network and the Sharjah Angel Investors Network, that provide funding to startups.

c. Crowdfunding: Crowdfunding platforms have gained popularity in the UAE, providing startups with access to a large pool of individual investors. Platforms such as Eureeca and Beehive provide startups with an alternative source of funding, allowing them to raise capital from a diverse group of investors.

Cryptocurrency Funding

In recent years, cryptocurrency has become an increasingly popular way for businesses in the UAE to fund their operations. Cryptocurrency is a decentralized digital currency that uses cryptography to secure transactions and control the creation of new units. This form of funding has become attractive for businesses in the UAE due to its fast processing times, low transaction fees, and decentralized nature. Some of the different ways businesses in the UAE are using cryptocurrency to fund their operations include the following:

a. Initial Coin Offerings (ICOs): An Initial Coin Offering (ICO) is a fundraising mechanism used by businesses to raise capital by issuing new digital tokens or coins in exchange for cryptocurrency. Businesses in the UAE can use ICOs to fund their operations by offering tokens or coins that represent a share of ownership or a future reward for early investors. For example, in 2017, Dubai-based blockchain start-up ArabianChain Technology launched an ICO, raising $817,000 to develop a new blockchain-based platform for the Islamic finance industry.

b. Cryptocurrency Loans: Cryptocurrency loans are another way for businesses in the UAE to obtain funding using cryptocurrency. In this model, businesses can borrow cryptocurrency from individuals or companies in exchange for interest. The borrower can use the cryptocurrency to fund their operations or other ventures. For example, in 2020, a UAE-based start-up called Rain raised $6 million in a seed funding round led by Middle East Venture Partners. The funds were used to expand the company's cryptocurrency exchange platform.

c. Cryptocurrency Mining: Cryptocurrency mining is the process of verifying transactions on a blockchain network and receiving rewards in the form of cryptocurrency. Businesses in the UAE can use cryptocurrency mining as a means of generating income, which can be used to fund their operations. However, this method requires a significant investment in hardware and energy costs. For example, in 2019, Dubai-based blockchain start-up BitOasis launched a cryptocurrency mining platform that allowed users to mine various cryptocurrencies, including Bitcoin and Ethereum.

d. Payment Processing: Businesses in the UAE can also accept cryptocurrency payments as a means of funding their operations. By accepting cryptocurrencies such as Bitcoin, businesses can increase their customer base and reach a global audience. Additionally, cryptocurrencies offer faster processing times and lower transaction fees than traditional payment methods, which can help to reduce costs for businesses. For example, in 2019, Dubai-based real estate developer Emaar Properties announced that it would accept Bitcoin and Ethereum payments for property purchases.


The UAE has a thriving startup ecosystem, and the government and private organizations have launched several funding initiatives aimed at supporting startups and entrepreneurs. Government support programs such as the Khalifa Fund for Enterprise Development, Dubai SME, and Dubai Future Accelerators provide financial assistance and support to startups, while private funding initiatives such as venture capital firms, angel investors, and crowdfunding platforms provide startups with access to alternative sources of funding. These funding initiatives have played a crucial role in supporting the growth of the startup ecosystem in the UAE and have helped many startups and entrepreneurs succeed.

The UAE Laws Series in our ongoing series published weekly to talk about the different laws in the UAE concerning businesses, foreign investments and the related laws and regulations promulgated to provide a helpful and reliable guide whether you are seeking to be employed in the UAE or doing business in the UAE. This is not intended to substitute a qualified UAE lawyer or legal consultant's legal advice. Our legal partners in the UAE are ready on hand to assist you in all of your enquiries and needs. You can email me at to know more.

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