UAE SMEs are borrowing again after a punishing year -Beehive’s CEO

UAE small businesses are borrowing again after the regional conflict froze lending in the spring, Beehive CEO Peter Tavener tells EnterpriseAM. The SME lender expects to approve about AED 150 mn in UAE loans in October, which would make it its best month on record, beating February’s pre-conflict peak. Tavener expects monthly approvals to pass AED 200 mn by 2Q 2027. Most of the demand is for growth rather than survival, he says, and early signs of borrower stress over the summer have since eased.

IN CONTEXT- Beehive is one of the UAE’s largest SME lenders. It has lent close to AED 6 bn since launch and has a loan book of about AED 1.2 bn. In 2025, it secured an initial AED 500 mn funding commitment from Goldman Sachs, with Magellan Capital participating, and Tavener says the facility can now support up to AED 2 bn of UAE lending. It lends to the part of the market that’s underserved: businesses with AED 5-50 mn in revenue. Remember: SME lending made up less than 10% of UAE bank lending in 2024.

Lending fell sharply in March and April on the back of SMEs holding off borrowing, with Beehive itself tightening its lending criteria, Tavener tells us. On Beehive’s book, there were signs of stress earlier in the conflict — but they’ve since improved.

Beehive tracks loans five to 30 days overdue as its early warning sign. That share rose to about 6% in June and July, which Tavener says made him “a little bit nervous,” before falling back to its pre-conflict level at about 2.5%. Some borrowers asked to restructure in March, April, and May, mostly to delay one or two payments by about 90 days, and Beehive approved most of those requests.

Why it matters: It’s been the hardest year for Emirati small businesses since the pandemic, with higher shipping costs, slower deliveries, and slower payments all squeezing buffers. The cost of shipping a container from China has risen from USD 1.2k before the conflict to about USD 10k, Tavener says. Delivery times are the bigger problem: a shipment that took 60 days can now take 120, which delays sales and the money they bring in.

Those pressures are why firms were given a helping hand earlier in the year. The Central Bank of the UAE introduced a resilience package in March that eased capital and liquidity rules for banks and let them give struggling borrowers payment deferrals without classifying those loans as distressed. About AED 13.5 bn in repayments were deferred for more than 135k customers.

The squeeze

How hard SMEs were hit depends on whether a business can pass the cost on. A specialty food importer on margins of 20-30% can absorb a 10% rise in costs and still make money, Tavener explains. On the other hand, an electronics or white goods importer on margins of 1-2% can’t; it has to raise prices. Hardest hit are businesses locked into fixed-price contracts signed before the conflict, especially in construction, where already thin margins have been crushed by subsequent cost spikes.

For others, the problem was demand. Travel, tourism, events, and some logistics firms were hit hardest when activity stopped in the spring and have not fully recovered, though Tavener says they are coming back quickly. Businesses serving residents have fared better: food and beverage, particularly lower-priced outlets, have rebounded strongly. Services and manufacturing firms, which make up a large share of Beehive’s mostly B2B portfolio, are holding up well. Trading companies are recovering too, but Beehive caps lending to them because their default rates have historically run higher.

SMEs are being squeezed on payments from both sides. Overseas suppliers are demanding more upfront payments, Tavener says, while customers are taking longer to pay. That’s long been a problem in the UAE: a client that would settle an invoice in 60 days in Europe or the US might take 180 days here, he says. In the meantime, the SME still has to pay its staff, rent, and suppliers, so it borrows to bridge the payment lag. “There is a funding gap, but it’s caused in this region by the fact that payment terms are stretched beyond what is normal,” he says.

Survey data backs that up. Around two in five B2B invoices in the UAE are paid late, and far more businesses say customers are paying more slowly than more quickly, according to Atradius’ latest Payment Practices Barometer, carried out in 2Q 2026. As a result, 47% of companies say they need more financing and 46% say they have less liquidity headroom, while concern is growing that overdue invoices will turn into bad debt.

The outlook

Beehive is keeping credit tight into 2027. It tightened its credit policies sharply in March and has loosened them only slightly since. They’ll stay tighter than before the conflict until at least the end of the year, possibly into early 1Q 2027, “to ensure that any remnants of stress have fully flushed through,” Tavener says. Beehive mainly judges resilience by liquidity cover: it wants a borrower’s average monthly cash balance to be about 2.5x its monthly loan repayments to all lenders. When one of a borrower’s clients starts paying late, Beehive stops financing invoices to that client but continues lending against the borrower’s other customers.

What’s next: The deferred bank loans started coming due in September and this month, and Bloomberg Intelligence expects any stress to show up six to 12 months later. Beehive will loosen its credit policies once that stress has worked through, Tavener says.