Loan-restructuring scheme for indebted businesses will help small enterprises grow.

Silvia Razgova / The National
Loan-restructuring scheme for indebted businesses will help small enterprises grow. Silvia Razgova / The National

Bank changes will help SMEs



Many small and medium enterprises (SMEs) fail in their infancy. The process of transforming a sound business idea into a successful enterprise is a difficult one and that is not necessarily a bad thing. Without failure there can’t be success. Faced with this, SMEs need flexibility when it comes to debt repayment and loan restructuring. Failure to recognise the fact that many SMEs fail will only increase the debt burden over time.

The UAE Banking Federation’s plan to help struggling SMEs restructure their debt is a step in the right direction. At a time of low oil prices, the SME sector is a valuable area of the national economy. We need our businesses to be focused on new ideas and ventures that help the economy expand.

Under the federation’s plan, an SME with multiple loans can enter a scheme whereby lenders “coordinate their position and work to assist the company in restricting its future payments”. In effect this is a step towards bankruptcy protection and falls in line with a proposed insolvency law. The law, based on French insolvency practices, was approved by the Cabinet in July but is still waiting to be assessed by the Federal National Council. When passed, it will allow companies to escape criminal charges for bouncing cheques while undergoing a bankruptcy administration process.

While these changes might seem small, they are necessary to help grow the SME sector and to protect banks. Most of the industrialised world has some form of bankruptcy legislation that facilitates certain protections for banks in the case of insolvency. Given the state of the global economy, investment banks such as EFG-Hermes have warned of fallout thanks to rising levels of bad debt held by SMEs. Debt could spread to individual banks and lead to a much deeper financial crisis.

Insolvency protection and loan restructuring will stave off a crisis, help banks recuperate debt and ensure that SMEs are nimble in challenging markets. A coordinated approach that balances the needs of SMEs and banks is in the national economic interest.

The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Power: 268bhp / 536bhp
Torque: 343Nm / 686Nm
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
On sale: Later this year
Jigra
Director: Vasan Bala
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Rated: 3.5/5
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The specs

Engine: 4-litre twin-turbo V8

Transmission: nine-speed

Power: 542bhp

Torque: 700Nm

Price: Dh848,000

On sale: now

RESULT

Leeds United 1 Manchester City 1
Leeds:
 Rodrigo (59')
Man City: Sterling (17')

Man of the Match: Rodrigo Moreno (Leeds)

Joker: Folie a Deux

Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson

Director: Todd Phillips 

Rating: 2/5

Moon Music

Artist: Coldplay

Label: Parlophone/Atlantic

Number of tracks: 10

Rating: 3/5

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Call of Duty: Black Ops 6

Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

The specs: 2018 Nissan Patrol Nismo

Price: base / as tested: Dh382,000

Engine: 5.6-litre V8

Gearbox: Seven-speed automatic

Power: 428hp @ 5,800rpm

Torque: 560Nm @ 3,600rpm

Fuel economy, combined: 12.7L / 100km

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The specs

Engine: 1.5-litre 4-cylinder petrol

Power: 154bhp

Torque: 250Nm

Transmission: 7-speed automatic with 8-speed sports option 

Price: From Dh79,600

On sale: Now

MATCH INFO

Liverpool 2 (Van Dijk 18', 24')

Brighton 1 (Dunk 79')

Red card: Alisson (Liverpool)

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