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Mahdi Kilani, head of business banking at Abu Dhabi Islamic Bank

Abu Dhabi Islamic Bank has a word of advice for the region’s startups

The head of business banking at Abu Dhabi Islamic Bank (ADIB) wants emerging businesses in the region to focus on proper financial management. He underlined it as a basic requirement that no bank can afford to overlook while funding startups.

Mahdi Kilani made this remark during his recent speech at the Arabian Business Startup Academy, hosted by the Grosvenor House in Dubai. He pointed out that any bank would refrain from providing capital to startups if they are over-leveraged and don’t maintain proper bookkeeping.

“Many of the startups we’ve seen tend to be over-leveraged, with improper bookkeeping done by part-time accountants,” he said, adding this is one key reason why Abu Dhabi Islamic Bank approves financing only for those businesses that have been around for at least three years.

Kilani also quashed the allegations that banks are often reluctant to lend emerging businesses. “Don’t believe it. In the last three years, we’ve invested significantly in small and medium-sized organizations,” he said.

He stressed the point that it’s all about how mature a business is. That’s the key criteria that eventually determine whether banks will rush in to fund you or they will stay away until you have a functional financial management mechanism

The ADIB head also urged emerging businesses to avoid overspending, which he considers to be a bane for all those entrepreneurs who still have a lot to learn about managing their assets.

“What they need to stop doing is overspending,” he said, adding that most businesses are unlikely to make any money in the initial six months of their existence. Therefore, he reaffirms, they shouldn’t “over-leverage the business by piling on too many payback commitments.”

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