National Bank of Fujairah Signs Credit Guarantee Fund Scheme Cooperation Agreement With Emirates Development Bank

National Bank of Fujairah (NBF) PJSC announced that it has signed a cooperation agreement with the Emirates Development Bank (EDB) Credit Guarantee Fund Scheme designed to alleviate one of the key challenges faced by SMEs and improve their access to financing. By providing much-needed financing to the SME sector, the programme plays a pivotal role in driving entrepreneurship which has been identified as a key pillar in the government’s diversification strategy and the UAE Vision 2021.

As part of the guarantee fund scheme, SMEs will have access to financing of up to AED 3.5million for existing companies and AED 1.7million for start-up businesses with EDB providing credit guarantee to cover up to 70 per cent and 85 per cent to the partner bank respectively. As a partner bank, NBF will secure the client with initial due diligence, analyse their credit eligibility against pre-agreed risk acceptance criteria with EDB, and prepare the credit proposal which will be submitted for EDB approval. Once approved, EDB will release the credit guarantee coverage.

Commenting on the side-lines of the signing ceremony, Vince Cook, NBF’s CEO, said: “SMEs are the engine of economic growth as they account for more than 86 per cent of the total private sector workforce as well as more than 60 per cent of the country's current GDP, which is estimated to go up to 70 per cent by 2021. As such, the Credit Guarantee Fund Scheme is a very important step towards revitalising the SME sector and supporting growth and expansion by minimising financing risks for lenders. At NBF, we have been continuously supporting the SMEs in UAE and have been a steady player in this segment and will continue working with all stakeholders to support businesses across the UAE.”

The programme is designed to improve SME access to financing by covering part of the credit risk faced by banks in case an SME fails to repay the loan through the guarantee fund scheme. The main purpose is to provide new and existing SMEs easy access to finance on risk-sharing basis with partner banks at affordable interest rates, grow existing businesses into larger corporates by providing them with access to financing for business expansion, working capital and day-to-day operating costs, and help develop high-priority sectors to spur growth and boost the overall economy.

Since its inception, NBF has built its reputation as the financial partner for businesses in the UAE. Testament to this, SME lending traditionally ranges between 20 per cent to 25 per cent of total loans. NBF currently has 8 per cent to 10 per cent of the UAE’s SME business in the banking sector as a whole. Boasting cross-sectorial expertise, the bank provides bespoke solutions and extensive market knowledge in specialised areas such as corporate banking, business banking, trade finance, precious metals and treasury among others.