Unlock Financial Success for UAE SMEs with Magnati and Aafaq
Embedded Financial Solutions for UAE’s SMEs
This partnership is focused on streamlining the loan application process for SMEs. By leveraging Magnati's embedded financial solutions platform, the complexity associated with traditional loan applications is reduced, and access to Islamic financial services is significantly improved. The platform seamlessly integrates real-time POS transaction data into the lending process, enabling a quicker and more efficient loan application procedure. SMEs can now make use of these solutions for various financial needs such as business loans, insurance, and financing for POS systems, equipment, invoices, and receivables. Through this collaboration, both companies are committed to offering enhanced access to Islamic financial services, enabling entrepreneurs to fuel the growth of their businesses.For instance, a small retail business in the UAE can utilize the integrated POS transaction data to present a more comprehensive picture of their financial activities during the loan application process. This not only speeds up the approval time but also increases the likelihood of obtaining the necessary funds to expand their operations. Insurance coverage can be seamlessly integrated into the financial package, providing SMEs with an added layer of protection for their business assets.
Moreover, the financing options available through this partnership allow SMEs to invest in essential equipment and infrastructure, which can lead to increased productivity and competitiveness in the market. By having access to these financial resources, SMEs can better manage their cash flow and take advantage of growth opportunities.
Challenges faced by SMEs in the Emirates
SMEs hold a crucial position in the economy of the UAE, contributing significantly to growth, diversification, and workforce development. According to the Dubai Statistics Center, SMEs make up 94% of the total businesses operating in the Emirates and provide 86% of the private sector jobs. However, despite these impressive statistics, several challenges continue to plague SMEs and hinder their ability to secure financing.InvoiceMate highlights that strict collateral requirements pose a major obstacle for many SMEs in the UAE. Since many of these businesses lack the necessary assets to meet these conditions, they find it difficult to obtain loans. High interest rates further exacerbate the situation, making loans less accessible and increasing the financial burden on SMEs. Poor financial management practices and limited transparency also undermine merchants' ability to demonstrate their creditworthiness to potential lenders or investors. The lack of a credit history, especially among new start-ups, further reduces their eligibility for loans.
For example, a startup in the service industry may struggle to secure a loan due to their lack of established credit history. Even if they have a promising business model and growth potential, the absence of collateral and high interest rates can make it nearly impossible to access the funds needed to get the business off the ground. This creates a vicious cycle where limited access to resources restricts the growth rate of SMEs and their ability to contribute to economic development.