Access to finance is the biggest challenge facing small businesses and entrepreneurs in the UAE, according to the region's leading business intelligence provider MEED. The results came in response to MEED's survey asking 250 respondents to name their three main business challenges. It heads the list for 36 percent of the businesses polled, and is second and third for 12 and 13 percent of respondents respectively. The survey comes ahead of the fifth edition of MEED's Gulf Capital SME Awards. The other top challenges mentioned by business owners include customer acquisition at 12.4 percent and lack of awareness in their respective market sectors, 12 percent that are affecting growth prospects for this year. "One of the biggest hurdles for young businesses is access to adequate financing to fund their future growth," said Dr. Karim El Solh, CEO of Gulf Capital, one of the leading alternative asset management firms in the Middle East and the Awards' headline sponsor from the start. "Finding banks and other traditional financial institutions that will support their growth is difficult for most during these challenging times, especially for those with asset-light businesses or with a limited track record of profitability. "However the UAE's vision to be a global hub for innovation, creativity and business development, all of which contribute to a more diversified economy and sustainable future for the country, have encouraged many entrepreneurs to start successful knowledge based businesses, which are typically asset-light but have strong cash flows. These young businesses have to raise money from alternative sources and have to be efficient in how they use it." "Comprising around 300,000 companies and accounting for 86% of the workforce in the private sector, SMEs play a critical role in the UAE's economy and contribute substantially to income, output and employment. The SMEs that are doing well today are those with a vision of where they want to be, but who are still flexible in the steps they must take to get there. They need proper planning, agility and strong execution and determination to achieve their vision and reach a certain level of profitability," El Solh further said. Just over half – 51 percent – of the respondents in the survey indicated that they secure their financing from banks and traditional sources of financing, but 21 percent still rely on family and friends. Angel investors and private firms provided financing for nine percent of the respondents. "The challenges to get finance for SMEs are both internal and external to the organization,'' said Roy Nouhra, founder and president of ASIS Boats, last year's Gulf Capital Business of the Year, ‘'Externally, the federal and local governments have to increase the incentives to banks in order to encourage them to have more appetite to lend to younger and more asset-light institutions. Internally, SMEs need to have a proper corporate governance, accounting records and a solid business plan." "Over the years, the awards program has become highly sought-after amidst the SME community in the UAE. It has graduated many SMEs that have truly demonstrated what it takes to be successful entrepreneurs who can build excellent businesses through dedication, innovation and resourcefulness. Many of these dynamic, forward-looking SMEs have provided employment opportunities for thousands of professionals and have contributed positively to the overall economy. Gulf Capital is honored to support the SME Awards that reward and celebrate the forward-thinking firms and entrepreneurs that will shape the UAE's post-oil economy," El Solh added. "It is always small businesses that get hit hardest in a slowdown," said Richard Thompson, MEED Editorial Director. "Yet they are the companies that drive new ideas and innovation that will help boost further growth. The awards are about recognizing the achievements of the UAE's best small businesses; and about raising awareness and support for their vital contribution to the future success of the Emirates."
