Brief:

Although most of the companies have common grounds in terms of turnover, risk factors, expansion plans, etc., however there are no two companies are the same. Banks usually scrutinize balance sheets, income statements, and cash flows for the past 2-3 years, plus projections. Key ratios include debt service coverage (DSCR >1.2-1.5x), loan-to-value, current ratio (>1.33), and interest coverage. They calculate working capital gaps via turnover or traditional methods, assessing inventory/receivables holding periods against industry norms. Revolving credit facilities and overdrafts stand out as top choices for addressing working capital needs due to their flexibility in covering short-term cash gaps like payroll or inventory without fixed repayment schedules. Invoice financing or factoring provides quick funds against receivables, ideal when client payments lag.

Types of Facilities

Corporate banking facilities provide tailored financing and services to businesses for operations, growth, and risk management. Common types include credit lines, loans, and specialized support tools suited to corporate clients.

• Credit Facilities: These offer flexible funding access, such as revolving credit lines for ongoing working capital needs and term loans for fixed investments like equipment or expansion. Overdraft facilities allow short-term borrowing against accounts, while asset-based lending uses receivables or inventory as collateral.
• Trade Finance: Instruments like Bank Guarantee (BG), Standby Letter of Credit (SBLC), Letter of Credit (LC) and export financing support international transactions, mitigating risks in supply chains. Useful for Dubai corporates in global trade via ports like Jebel Ali
• Treasury Services: Cash management tools handle payments, liquidity forecasting, payroll, and FX hedging to optimize daily operations, including escrow and lockbox accounts for secure fund handling.
• Specialized Financing: Fixed asset financing covers machinery via collateral; project finance funds large ventures; ship finance, structured trade finance aids complex deals.

Assessment Process

Banks evaluate eligibility for cash credit (secured working capital lines against inventory/receivables) and overdrafts (unsecured short-term account extensions) using financial health, collateral quality, and repayment capacity, aligning with broader corporate facility assessments discussed earlier.

• Financial Metrics: Banks require strong ratios like debt service coverage (>1.2x), current ratio (>1.33), and turnover-based working capital gaps, verified via 2-3 years of audited financials and 6-month bank statements. Stable income (e.g., min INR 35k equivalent in AED for UAE) and positive cash flows signal repayment ability.
• Credit and Account History: A good AECB score (above 700), no NPAs/defaults, and consistent account performance (no frequent NSF) are essential; existing customers get priority. Business vintage (min 3 years) and management track record factor in.
• Collateral Evaluation: Cash credit demands hypothecation of stocks/receivables (80-90% drawing power post-audit), while overdrafts may be unsecured or against FDs. UAE banks like Emirates NBD assess via valuers and stock inspections.
• Documentation and Process: Submit business plan, IT returns, ownership proofs; limits set at 20-25% of turnover, reviewed quarterly/annually. For your Dubai brokerage clients, emphasize prepping these to match Central Bank norms from prior talks.

Documents:

1- Passport copy and Emirates IDs of partners and directors

2- Trade license and memorandum of associations

3- Proof of address like utility bills, Ejari, ets.

4- AECB report (if available)  

5- Audited financials for the past 3 years

6- Business bank statements for the past 6

7- Business plan with projections

8- Collateral documents (if available)