This collaboration aims to support SMEs in the UAE through an embedded financial solutions platform that provides access to financial services and resources.
Embedded financial solutions for UAE’s SMEs
This partnership aims to make the process of loan application more efficient, using Magnati’s embedded financial solutions platform to reduce complexity and improve access to Islamic financial services for small and medium merchants.
The platform integrates real time POS transaction data into the lending process to enable a faster loan application process. SMEs can utilise this for business loans, insurance, and financing POS, equipment, invoices and receivables.
Through this collaboration, both companies intend to offer improved access to Islamic financial services that enable entrepreneurs to grow their businesses.
Challenges faced by SMEs in the Emirates
SMEs play a significant role in the economy of the UAE, contributing to growth, diversification and workforce development. According to Dubai Statistics Center, SMEs account for 94% of the total businesses operating in the Emirates, providing 86% of the private sector jobs.
Despite these statistics, several challenges persist, impacting businesses’ ability to secure financing. According to InvoiceMate, strict collateral requirements remain a major obstacle, as many SMEs in the UAE lack assets to meet these conditions.
High interest rates further amplify the situation, making loans less accessible, thus increasing financial burden for SMEs. Other financial challenges include poor financial management practices and limited transparency, which can undermine merchants’ ability to demonstrate their creditworthiness to potential lenders or investors. Lack of credit history, particularly among new start-ups, further diminishes their eligibility for loans.
All these factors combined create a cycle of limited access to resources that potentially restrict the growth rate of SMEs and their capacity to contribute to economic development.
