HSBC Bank Middle East has started a Dh1 billion international trade fund for small and medium-sized enterprises (SMEs), the fourth such fund of its kind since 2010, in an effort to convince entrepreneurs that banks are keen to extend loans.
“One of the perception gaps is that SME owners feel that the banks aren’t giving them sufficient credit,” said Nick Levitt, the head of commercial banking at HSBC in Dubai.
“HSBC wanted to put a predetermined amount out there. There was a disconnect in the SME segment. We thought the best way to demonstrate our support was to put a tangible sum out there.”
“The banks have only really been interested in SMEs in past seven, eight years. There’s room for growth in the sector. The wider impact on the economy are so compelling, that it makes sense to support them.”
Smaller businesses that have cross-border trade and an annual revenue of at least Dh30 million will be able to tap the fund.
The last three funds have been fully subscribed within about three to six months, Mr Levitt said.
The terms of the loans are the same as those offered to SMEs outside of the fund, he added.
While most cross-border trade of SMEs in the UAE is mostly within the region and to China, emerging markets such as Vietnam, India, Malaysia and Indonesia, are expected to get more exports from the UAE in the medium to long term, according to the bank’s research.