The National Business

Gulf Finance Corporation (GFC), a unit of Shuaa Capital that specialises in lending to small and medium-sized enterprises and microbusiness, has launched trade finance products to capitalise on the country’s growing import-export sector.

“The UAE has developed into a regional trading hub and our research shows that there is a gap in the market for the position of trade finance services to SMEs and microbusinesses,” said the chief executive David Hunt. “By launching our trade finance facility we hope to close this gap by fulfilling SMEs’ requirements for both short and long-term liquidity, making it affordable and accessible for SMEs to engage in real cross-border trade transactions.”

According to a UAE survey conducted by GFC in the first quarter of this year, 20 per cent of surveyed SME customers said they were planning to expand into new regions, a move that would help to spur greater trade.

The trade finance products include letters of credit, bonds and guarantees, starting at a minimum of Dh50,000 for a minimum period of 30 days, the company said.

SMEs account for about 60 per cent of the UAE’s non-oil economy, including 90 per cent of businesses overall. The sector employs more than 42 per cent of workers, with the Ministry of Economy predicting SMEs will account for 70 per cent of the country’s GDP by 2021.

This is GFC’s second product offering this year after it launched medical finance in February.

“We are planning to launch bonds and guarantees, performance bonds, advanced payment bonds, bid bonds and guarantees that are required for small businesses to help them with their projects,” said Mr Hunt. “We are also launching invoice discounting, which enables customers to release cash that is tied up in unpaid invoices, and we think that is very important for SMEs. The ability to have cash and make payments and secure discounts through cash payments is really important for small businesses.”

The company, which hopes to grow its loan book from about Dh750 million to Dh1 billion by the end of this year, is also set to expand its business in Saudi Arabia. The UAE accounts for about 80 per cent of GFC’s profit, with Saudi Arabia contributing the remainder.

GFC secured a Dh500m syndicated loan in January to fund lending to SMEs.

GFC’s first-quarter net profit fell 1.35 per cent to Dh7.3m from Dh7.4m a year earlier, while net revenue rose 11.4 per cent to Dh34.3m. On Thursday, Dubai-based Shuaa Capital reported a first-quarter net loss of Dh1.6m compared with a net profit of Dh8.2m in the year-earlier period because of market uncertainty from lower oil prices, concerns about Europe and the geopolitical situation in the Middle East.