Beehive places peer-to-peer funding in the core of UAE`s SMEs . . . . . . . . . . . . . . . . Former Emirates NBD CEO has launched the region’s first online small and medium enterprises (SMEs) peer-to-peer (P2P) lending platform. It was announced on Sunday that Beehive will be the Gulf’s first P2P online lending platform for SMEs that will directly connect investors with established businesses. Beehive aims to ensure SMEs find faster access to lower cost finance while investors are provided with better returns, as well as risk management services by diversification of their investments. “Presently, a major stumbling block for businesses with growth aspirations is gaining access to credit, as banks generally reject between 50-70 per cent of SME loan applications,” said Rick Pudner , the chairman of Beehive. Beehive’s online platform will allow flexible access for funds for established companies that seek investment between AED100,000 and AED500,000. The loan agreements are then facilitated between the two parties, and Beehive charges a small percentage fee of the loan amount, although the exact percentage was not disclosed. The companies will receive funding in about a week while investors receive monthly repayments at target rates. Peer-to-peer lending, also dubbed as marketplace lending, is forecast to total around $9 billion globally this year, and is estimated to hit $1 trillion by 2025. UAE`s Need for P2P SMEs represent 90 per cent of total businesses in the UAE but account for just four percent of bank loans. Although SMEs credit access increased 4% from last year from 3.85% of bank loans, it is still meager considering that SMEs account for nearly 60% of the United Arab Emirates’ non-oil gross domestic product, and employs more than 42% of workers. The International Finance Corporation (IFC) forecasts that the current funding gap for SMEs in the Middle East-North Africa region is around $260 billion. A survey of SMEs conducted by personal finance website Souqalmal found that only 28% of respondents had taken financing from a bank, and more than half of these said the process was “not easy.” The SMEs sector has become a top economic priority for the UAE government and has been the target of a number of changes in regulations and legislation to expand SME growth. As start-ups and small businesses cannot secure bank loans, they turn to other venues to find funds, including venture capitalists, angel investors or seed funding. These types of funding are generally sizable and offer notable growth potential, but companies are generally required to present timely results after getting the funds. P2P, also called marketplace lending, is a type of crowd-funding that could change the way SMEs find capital, and how investors see risk and return. The technologically advanced platform could be perfect for the UAE, and could be a real alternative to traditional debt markets, that are already giving difficulties for SMEs in the country, as it provides better value to both sides of the transaction. #egyptyard
Posted on: Mon, 03 Nov 2014 17:38:05 +0000
Trending Topics
Recently Viewed Topics
© 2015