Mohammed Bin Rashid Fund launches receivable finance solution to enhance cash flows for start-ups

The Mohammed Bin Rashid (MBRF) in Dubai SME, the agency of the Department of Economic Development (DED) mandated to develop the small and medium enterprise (SME) sector, has announced the launch of a receivable finance facility through ‘Invoice/LPO Finance’ to help entrepreneurs launch their business projects without worrying about operating expenses or funds required to buy raw materials.

‘Invoice/LPO Finance’ will improve cash flows for entrepreneurs, through extending a cash advance facility for payments due in future, thus eliminating a major obstacle for start-up growth.

Entrepreneurs fulfilling the eligibility criteria of MBRF can apply for the facility with original invoices and local purchase orders (LPOs) from the supplier.

The new facility is part of diversifying MBRF services to meet the varied requirements of entrepreneurs and follows a study conducted among Dubai SME members, said Abdul Baset Al Janahi, CEO of Dubai SME and Vice Chairman of the Supervisory Committee of MBRF.

He pointed out that "we gathered feedback from a number Dubai SME members whose efforts to expand their projects were hampered by liquidity challenges.

The new products from the Fund gives beneficiaries a short-term credit facility starting with 10,000 dirhams and going up to a million dirhams, depending on their purchase invoice,” Al Janahi explained.

Al Janahi said MBRF has laid down clear and convenient mechanisms to provide financial solutions for local entrepreneurs according to the size of their project.

He added, “Cash flow is critical to a start-up and for the competitiveness of an enterprise.

He said that we have been seen an increase in orders allocated to local SMEs in the first half of 2016 and with the new facility, and added that we expect such orders to increase by no less than 15% in 2017.”

He pointed out that the Fund works with entrepreneurs on developing their ideas into projects and to obtain the necessary approvals from government agencies.

He added not only that but also in addition to organising training programmes and workshops to integrate their enterprises into the local market.

Explaining the criteria for the new facility, Saeed Matar Al Marri, MBRF Manager and Deputy CEO of Dubai SME said the projects should be Dubai-based and owned by UAE citizens.

Al Marri said, “The applicant’s personal commitment to the development and implementation of the work plan as well as to project management in general will also be evaluated.

“Continuous follow-up and performance monitoring of the financed projects by way of direct communication, development consultancy and a review of financial reports through field visits are also part of our support,” Al Marri said.

The value of MBRF assets currently exceed 600 million Dirhams.

The UAE nationals in the 21-65 age group can avail of two types of loans from the Fund, the Seed Capital Loan, offered directly to start-ups requiring funding of more than 50,000 Dirhams but not exceeding 500,000 Dirhams.

The Credit Scheme Loan offered through banking partners and guaranteed by the fund, to both startups and existing businesses requiring a funding of more than AED 500,000 but not exceeding 5 million Dirhams.

The Fund also extends lines of credit to entrepreneurs through partner banks, wherein the Fund acts as the guarantor.

MBRF also supports entrepreneurs in preparing the funding application, feasibility studies and in evaluating appropriate financial solutions, in addition to monitoring the progress of the project and its performance.

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