Loan Against POS Sales in UAE: How It Works

Loan Against POS Sales in UAE: How It Works

Businesses that accept card payments can use their sales history to apply for a business loan.

This is often called POS financing, POS Loan, or Merchant Financing. The financing provider may look at the business's card sales, bank statements and trading history when reviewing an application.

Here is how it works and what businesses should know before applying for a POS Loan.

What Is a Loan Against a POS Machine?

A loan against a POS machine helps businesses that get regular card payments.

The POS machine itself is not usually the main focus of the application. Instead, the financing provider may look at the business's:

• Monthly card sales on POS machine (for last 12 months)

• Bank statements (for at least last 6 months)

• Business revenue

• Trading history or length of business

• Existing financial commitments like cards, loans, auto loans etc

Different Lenders (Banks and Fintechs) may use different names and structures for this type of Loan.

Learn more about POS financing in the UAE →

How Does POS Financing Work?

The process usually involves five steps:

1. Review of card sales The provider reviews the business's POS or card payment history.

2. Review of business finances Bank statements, length of business in UAE and other financial records may be checked.

3. Eligibility assessment The provider decides whether the business meets its requirements.

4. POS Loan decision If approved, the provider sets the available amount and repayment terms.

5. Repayment The business repays the financing, on monthly basis.

The process and requirements can be slightly different for each Lender.

Who Can Apply for POS Financing?

POS financing is mainly useful for businesses that receive regular payments using POS machines.

This may include:

• Retail shops

• Restaurants and cafés

• Salons

• Clinics

• Fitness businesses Service companies

• Other small and medium-sized businesses in the UAE

Having regular card sales does not guarantee approval. Each financing provider has its own requirements.

Check POS financing requirements →

How Much Can a Business Borrow?

There is no fixed amount that applies to every business.

A financing provider may consider:

• Average monthly card sales

• How consistent the sales are

• How long the business has been operating

• Bank statements

• Existing loans or payments

• Overall business performance

A business with steady, higher sales can access more financing options. Typically, lenders give loan amount which is upto 6 times the monthly average of POS sales volumes.

The final amount depends on the business and the Lender.

What Can POS Financing Be Used For?

Depending on the financing terms, businesses can use the funds for common needs like:

• Buying inventory

• Paying suppliers

• Purchasing equipment

• Opening or expanding a location

• Marketing

• Managing working capital

If you need funds for daily business expenses, check out working capital financing in the UAE.

POS Financing vs Business Loan

POS financing and a traditional business loan can be different in how the application is assessed.

The better option depends on the business, the amount needed and the terms offered by the financing provider.

You can also explore business loan options in the UAE.

What Documents Are Usually Required?

The exact documents depend on the provider. Common documents may include:

• UAE trade license

• Memorandum of Association (MOA)

• KYC (Passport and Emirates ID) of owner(s) and Signatory

• Business bank statements

• POS or card-sales records

• Company documents, like Ejari or Tenancy Contract

• VAT documents, where required

Having these documents ready can make the application process easier.

For more information, see our UAE business loan documents checklist.

Does POS Financing Require Collateral?

The good news is that POS Loan does not require property as collateral security.

However, Lenders insist on other types of security including assigning POS receivables and personal guarantees of owner etc.

It is important to check the full terms before accepting any financing offer.

How Can a Business Explore POS Financing?

A business can start by reviewing its monthly card sales, bank statements and other financial records.

It can compare financing options and check what different providers require.

EasyCapital helps UAE businesses explore merchant financing options through its network of financing partners. The financing provider makes the final decision on eligibility, amount, pricing and repayment terms.

Explore POS Financing Options →

Conclusion

POS Loan is a good choice for Retail businesses in UAE that accept regular payments through POS machines and need extra funding.

Before applying, businesses should compare the financing amount, total cost, repayment terms and eligibility requirements

This article is for general information only. Financing availability, eligibility, pricing, fees and repayment terms depend on the relevant Lender and are subject to approval.