The Fund leverages fintech to support start-ups

-The Fund leverages fintech to support start-ups in partnership with Beehive

The Mohammed Bin Rashid Fund for Small and Medium Enterprises (The Fund) in Dubai’s Department of Economy and Tourism (DET) is proceeding with its commitment to provide innovative financing solutions for SMEs, in line with the vision and directives of the leadership to provide a suitable environment that supports business continuity and entrepreneurship. The Fund has supported 1,224 SMEs to secure more than AED 145.8 million in financing through Beehive, a peer-to-peer lending platform, over the last five years.

The Fund is the financial arm of the Mohammed Bin Rashid Establishment for Small and Medium Enterprises Development (Dubai SME), an agency of DET. Established in 2017, the partnership between The Fund and Beehive, has evolved into a premier financing opportunity for SMEs. In 2021 The Fund supported SMEs with AED 65.29 million worth of financing, of which AED 47.67 was disbursed through Beehive to 374 projects.

Since its inception, The Fund has facilitated over AED 188 million through its multiple funding schemes either directly or through partnering various financial institutions, including Beehive. The partnership with Beehive, which aligns with the Dubai strategy to create a comprehensive ecosystem capable of developing innovative ideas and growing them into successful global institutions, provides Emirati-owned SMEs with easily accessible financing options, including a term loan (Business Finance) under a capital guarantee scheme, and working capital funding (Invoice Finance).

Starting from 2017 to the period ending on the 30th of September 2022, the partnership has accepted 6,515 requests from 1,211 SMEs for Invoice Finance and extended Business Finance to 13 projects. Total financing provided by the partnership during this period was AED 145.8 million, in which Invoice Finance had a significantly large share of AED 138.1 million.

As a revolving credit facility, Invoice Finance is a convenient solution for SMEs seeking support on working capital and hence, multiple requests are received from the same business in a single month. In 2022, the total financing of AED 41.4 million provided by The Fund-Beehive partnership to date has been in the form of Invoice Finance.

The first financial-technology (fintech) platform authorised to engage in peer-to-peer lending in the Middle East & North Africa (MENA), Beehive is registered with the Dubai Financial Services Authority in the Dubai International Financial Centre (DIFC).

The platform provides an innovative crowdfunding solution, allowing investors to participate in supporting emerging projects safely and securely, which, in turn, benefits and promotes growth for projects and investors.

Hamda Khalil Ali Hussain, Head of Underwriting & Risk Management at The Fund, said: “Beehive uses innovative financial technology to connect companies seeking fast and affordable financing with investors who can help fund their growth. It also instils institutions or individuals wishing to invest in start-ups with confidence via a guarantee from The Fund, allows them to reap rewarding returns, and encourages entrepreneurs’ relatives and friends to financially support their projects. The innovative financing option helps stimulate economic growth by supporting an important segment of our local enterprise community to grow and consolidate their bases.”

SMEs in Dubai, fully owned and managed by Emiratis, can obtain business financing of up to AED 1,250,000 backed by a 100% capital guarantee and financed by The Fund through its guarantee pool of AED 20 million. SMEs in Dubai, in which Emiratis have 50% ownership and management rights, also can obtain financing of up to AED 625,000, backed by a 50% capital guarantee.

The invoice financing service on Beehive directly connects businesses seeking working capital with investors willing to lend against the value of their invoices. Businesses can get up to 80% of the outstanding receivables on invoices that are due within 30 to 150 days. The minimum investment is AED 100, and an investor is also given the option to choose the type of loan or company to invest in; the sought funds will be disbursed within 24 - 48 hours. Invoice financing is ideal for UAE-based businesses that have been trading for a minimum of 12 months and have a strong credit history.

The guarantee provided by The Fund motivates investors to participate in lending and supporting SMEs so that in the event of a particular company defaulting on repayment, the valuation of the company applying for the loan would improve once it is supported by The Fund, which enhances confidence among individual and corporate investors.