An innovative platform provided by Dubai SME, the agency of Dubai Economy mandated to develop the small and medium enterprise (SME) sector, in partnership with Beehive is giving individuals the opportunity to invest in SMEs and reap remarkable returns while also enabling entrepreneurs and small businesses to consolidate their gains and aim for sustainable growth.
Dubai-based Beehive P2P Limited is the first financial technology platform to engage in peer-to-peer lending activity in the Middle East & North Africa (MENA) region and is regulated by the Dubai Financial Services Authority (DFSA) in the Dubai International Financial Centre (DIFC). The platform uses innovative technology to link companies seeking fast and affordable financing to suitable investors. Starting at a minimum investment of AED 100, the platform has become an incentive for investors to financially support local projects, thereby earning profits and contributing to overall economic growth.
Saeed Al Marri, Deputy of CEO of Dubai SME, said: “Dubai SME is committed to providing innovative financing solutions to SMEs in line with the directives of the leadership to support business continuity and SMEs in particular, which constitute the majority of companies operating in the emirate. The Beehive platform provides an innovative crowdfunding solution whereby investors can participate in supporting small businesses in a safe and secure way, beneficial for the investor and the SME.”
SMEs seeking financing through Beehive can register on the www.beehive.ae website, after which the company would be subject to an eligibility test and credit assessment. The SME will have to provide bank statements, personal data of the owner and its audited financial statements. Successful SMEs will be notified on the loan amount they could obtain, tenure and the profit rate applicable. The SME can then proceed with the loan request, and the funding opportunity will be made available to investors via the platform within 2-5 working days. Generally, the loan amount is pooled from contributors within a maximum of two weeks. A single company may obtain an additional loan after the first loan is paid off.
Additionally, the Beehive platform constitutes a unique opportunity for investors to register and open a free account on the platform. After registration, the investor’s account and data and bank account are verified to prevent fraud. The investor need not be a resident of the UAE.
In addition to the minimum investment threshold of AED 100, an investor is also given the option to choose the loan or company to invest. The expected annual return and profit percentage for the investor is about 10%* of the investment value, and it depends on the term of the loan, which could be 12, 24, or 36 months. Profits are deposited into the investor’s account every month, and the investor can withdraw their investment any time, provided it is not linked to a specific loan. In the event of a contribution to a specific loan, the investor can put their investment for sale on the secondary market or wait for the loan repayment period to expire. The investor can also contribute to more than one loan at the same time.
SMEs in Dubai, fully-owned and managed by Emiratis, can obtain financing of up to AED 1,000,000 backed by a 100% capital guarantee and financed by Dubai SME’s financial arm, The Mohammed Bin Rashid Fund (The Fund) through its guarantee pool of AED 20 million. SMEs in Dubai in which Emiratis have 50% ownership and management rights can obtain financing of up to AED 420,000, backed by 50% capital guarantee. The guarantee provided by The Fund contributes to motivating investors to participate in lending and supporting SMEs so that in the event of a particular company defaulting on repayment The Fund would take care of the outstanding capital and return the amount to investors. The valuation of a company applying for the loan improves once it is supported by The Fund, which enhances confidence among individual and corporate investors.
Beneficiaries of term loans under the capital guarantee scheme are given a three-month payment holiday at the beginning of tenure, following which repayments should be made as per the schedule specified. For working capital loans, the repayment period is 150 days and rates start at 0.8%, offering investors attractive returns. The capital guarantee includes only term loans, not working capital loans.
Dubai SME has allocated AED 25 million to the capital guarantee programme that is managed by The Fund and the Beehive Platform. A total of 220 number loans have been registered on this programme since the beginning of 2020 with a value exceeding AED 19 million, compared to 280 loans in 2019 valued at AED 16 million.