File - A woman walks past luxury towers in the Marina district of Dubai, United Arab Emirates, Monday, Nov.17, 2014. (AP Photo/Kamran Jebreili)
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Banks are tightening lending conditions for small, private companies in the Gulf – a sign that the region's economies are not escaping damage from the plunge of oil prices.Lending to small and medium-sized enterprises is only a tiny part of banks' business; in 2010, SMEs accounted for about 2 percent of GCC banks' loans, according to a World Bank study. SMEs rely heavily on other funding sources, such as nonbank financial companies.Banks are still lending generously to bigger borrowers.Loan rates are still falling for the big borrowers. Eid says he borrowed 200,000 dirhams ($54,500) in February from beehive, a peer-to-peer online lending platform for small businesses in the United Arab Emirates, at 14 percent compared to 24 percent demanded by a local bank.New economic projects awarded in the GCC totaled over $40 billion in the first quarter, up 9.9 percent from the previous quarter, according to Abu Dhabi Commercial Bank.A global U.S. regulatory crackdown on money laundering has increased compliance costs for banks doing SME business; banks must spend more time and effort checking their clients are legitimate, which is economically worthwhile for big firms but not so much for small ones.
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