Small and Medium Enterprises (SMEs) are often considered powerful engines that propel the growth of any economy in the world. SMEs account for more than 90% of the total registered establishments in Dubai and this overwhelming number has contributed to diversifying the emirate’s economy and also generating employment. However, SMEs have faced some challenges during setting up a business in Dubai, UAE especially during the COVID-19 pandemic. But it is also encouraging to note that emerging technologies like Fintech are providing robust opportunities for company formation in Dubai for the SMEs. To know more about the business setup opportunities regarding SMEs and Fintech, consult the best business setup consultants in Dubai, UAE.
SME Business Setup in Dubai: Things that the Entrepreneurs need to Watch out
SME entrepreneurs have plenty of opportunities for setting up a business in Dubai, both in the mainland and the free zones. The government has provided SMEs with an efficient supportive ecosystem for the companies to thrive in Dubai. As a result, SME company formation in Dubai mainland and free zones is not a challenging task. However, there are a couple of challenges that SMEs face while initiating the process of business setup in Dubai, UAE. They are,
1. Financial Access
As mentioned earlier, SMEs account for the majority of companies registered in Dubai and constitute around half of the labour force. However, SMEs have limited access to lending opportunities. The lenders consider the SMEs as financially risky clients and therefore it was tough for the small business entrepreneurs to receive loans and funding. The banks in the UAE ask for a high credit score to be eligible for loans and this is where the SMEs struggle.
Also read: Why Banks in the UAE are Reluctant to Finance SMEs?
2. Opening of Corporate Bank Account
The banks are under high due diligence pressure and therefore the SMEs often find it tough to open a bank account in Dubai. The UAE has introduced a slew of regulatory measures such as the Anti-Money Laundering (AML) programs and Combating the Financing of Terrorism (CFT) to fight financial crimes. To comply with such regulations the banks have tightened the due diligence and KYC procedures which have made the process of bank account opening in Dubai tough for the SMEs. The bank account opening becomes tough if the investors are from high-risk countries or lack any physical office for the company in Dubai.
Also read: Top Challenges in Opening a Bank Account in the UAE
How Fintech can Provide SMEs with Robust Solutions of Registering a Company in Dubai
Financial Technology or Fintech has been promising growth for a few years but witnessed a sudden spurt in demand after the COVID-19 pandemic hit the world. The sector has emerged as a Sunrise Industry as every industry is in need of digital transformation to enhance the growth prospects amid the pandemic. Fintech services have become a necessity for every sector including SMEs by solving the financial access problem and thereby easing the process of company formation in Dubai.
1. Fintech can Provide Smooth Route to Alternative Lending for SMEs
The Fintech platforms can help SMEs by providing easy access to alternative investors and the SME entrepreneurs can also request direct loans through such platforms. The alternative lenders are ready to take the risks in exchange for competitive returns, unlike the traditional lenders. Such platforms show more transparency in aspects like interest rates and SMEs can hugely beneficial in terms of financial access.
2. A More Streamlined Method of Raising Capital
Raising capital is one of the most important aspects of SME and startup business setup in Dubai. This is a tough job as the traditional way of raising capital often present more obstacles before the entrepreneurs. Also, the COVID-19 pandemic has reduced the SME owners’ chances of meeting potential investors as social distancing has become the new normal in Dubai or elsewhere in the world. The Fintech services provide SMEs with more reliable and streamlined ways of raising capital. The SME entrepreneurs just need to log on to the page of the Fintech platform to connect with a network of investors who could provide funding for SMEs. The Fintech platform also helps the SMEs raise the capital for business setup in Dubai through innovative methods like Crowdfunding.
Final Thoughts
The best aspect of setting up an SME in Dubai is that the entrepreneurs get a robust support system to overcome the basic challenges. The Dubai government has initiated many programs to support the SMEs and accelerated the initiatives in the wake of the COVID-19. In addition to the government efforts, emerging services like Fintech has opened up doors of opportunities for SMEs. With such a robust support system, setting up a small business in Dubai is no more a tough task.
Also read: How Startups & SMEs can Take Advantage of Low-Cost Business Setup in Dubai
However, the process of company incorporation in Dubai is a strategic decision as the selection of the right business jurisdiction itself plays a critical role in deciding the future of the company. The mainland and free zone jurisdictions vary in regulations and restrictions on business activities. In this backdrop, the investors need the professional assistance of reputed business setup consultants in Dubai like Jitendra Business Consultants (JBC).
JBC has a team of highly qualified business setup consultants who are well-versed in local laws and regulations such as labour laws and immigration laws. JBC earned the reputation of being one of the best business setup consultants in Dubai, UAE with years of experience in handling all the legal procedures of company incorporation and dealing with the government authorities to ensure compliance. Investors enjoy smooth company registration in Dubai by enlisting the end-to-end business setup services provided by JBC.