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Take a loan, do not go to jail

Take a loan, do not go to jail

Sometimes, the simplest ideas are the best. Like, for instance, not going to prison after you take out a loan.

February 24, 2011 1:52 by



Fortunately, someone at finance company Gulf Finance had a really good idea. They created a new product: a jail-free loan. Named SME Advance (it’s for small and medium businesses, obviously), it’s as simple as it sounds – you can take out the loan, and if the worst happens, Gulf Finance won’t hound you until you’re imprisoned.

“Since it was soft-launched in January, we’ve had over 400 applications,” said Steve Williams, CEO. Gulf Finance has a Dh2 billion loan portfolio for SMEs. “This is the start of something that needs to come. If you’re in business, particularly in a small business, then you need to be courageous. If that does not work, it shouldn’t be a criminal offence.”

“In finance, you build a relationship. If the client is unable to pay, then you agree on terms to extend the finance or reduce the amount of monthly payments.”

It seems so obvious, but then, the best ideas always do. I just hope now that Gulf Finance continues to have great success with the product, and that other lenders take note – it could be that a step-change might take place across the finance industry, and all without UAE law even having to change (which can be a notoriously long process).

As Smith explains, it makes perfect sense. “This is not about penalising people who can’t pay but building an environment where if your business doesn’t succeed, then you should be given a chance to repay or get back into the job market … we structure a loan in a way that allows you to repay the loan over time — rather than having to run away from the debt.”

Simple, brilliant… game changing? We’ll be watching closely.



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3 Comments

  1. Anupama V. Chand on February 27, 2011 9:32 am

    What a wonderful idea! And isn’t it great that the UAE laws do not need to be altered at all, because that, as the writer said, is one long process. The only fear with this is if Gulf Finance was to suddenly change its mind from becoming benevolent neighbourhood-helper to malevolent vendetta-seeker! We hope this does not happen, but the truth is the insecurities about taking out loans in the UAE definitely remain too close to home. The number of hard-luck stories of people who’ve defaulted on credit card payments, or lost their entire life’s savings investing in property that never saw light of day, can hardly be forgotten in a hurry. I don’t even own a credit card in this town, and prefer to keep it that way, just to avoid getting into problems with the law. Escapist? Perhaps…..but better safe than sorry, especially when one’s family might have to bear the brunt when things go wrong…..
    Not to take away from the applause that Gulf Finance definitely deserves though, if it has honourable intentions!

     
  2. Clifford on February 27, 2011 10:03 am

    WILL THIS BE A NEW TRAP FOR PEOPLE, JUST LIKE WHAT UAE BANKS ARE DOING NOW. REALLY SCARED OF BANKS IN UAE.

     
  3. AP on February 28, 2011 6:08 am

    Not come accross anybody who is happy banking in Dubai. Any service or new product offered by the bank, is and always will be in the banks favour.

     

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