The Emirates Development Bank (EDB) and the National Bank of Umm Al Qaiwain (NBQ) have signed a Memorandum of Understanding (MoU) to promote strategic financing alternatives for small and medium-sized companies (SMEs) in the UAE.

The Memorandum of Understanding, which will encompass Credit Guarantee and Co-lending programs, will assist fulfill a vacuum in SME lending support and increase their contribution to the country's GDP.

NBQ will provide up to Dhs10 million in funding to SMEs, with EDB guaranteeing or co-lending 50% of the facility amount. The initiative also seeks to assist UAE residents in their startup voyage by providing financial resources of up to Dhs1 million, with EDB ensuring or co-lending 60% of the amount.

The Memorandum of Understanding was inked by Ahmed Mohamed Al Naqbi, CEO of EDB, and Adnan Al Awadhi, CEO of NBQ.

“SMEs are the backbone of the economy,” added Al Naqbi. The UAE government has put a high priority on growing the SME ecosystem and increasing their contribution to the UAE's non-oil GDP.”

“Our Memorandum of Understanding with the National Bank of Umm Al Qaiwain would assist us in facilitating funding through credit guarantee and co-lending alternatives, allowing SMEs additional operational flexibility.” Al Awadhi stated, “The NBQ recognizes the critical role that SMEs play in the development of the nation's economy, which is why we have formulated financial solutions to facilitate SMEs in the UAE to trade safely and confidently and acquire access to international markets, thereby placing the UAE as a global centre of trade and export.”

The Credit Guarantee and Co-lending Programme provides a solid framework for EDB and NBQ to boost financial lending to SMEs, with an emphasis on key industries such as manufacturing, healthcare, infrastructure, food security, and technology.

The agreement is in line with EDB's recently announced strategy, which includes direct and indirect lending for SMEs (Supply Chain, Project, and Long-term Finance), an investment arm for startup companies and SMEs (accelerator, equity finance, business growth finance), and business advisory services for entrepreneurs, startups, and small businesses (coaching, consulting, mentoring, market research).

The Emirates Development Bank (EDB) said last Sunday that it had inked a contract with Beehive, the UAE's first peer-to-peer (P2P) platform, to increase funding alternatives for Small and Medium-sized Enterprises (SMEs).

The news follows EDB's strategic promise to help SMEs, startups, and big corporations in five key areas over the next five years, namely manufacturing, healthcare, infrastructure, food security, and technology. EDB, as an institutional investor, has first allocated Dhs30 million investments to eligible businesses through the Beehive platform.