FiMED Follow-ups

The Jewish community federations in North America have announced loans exceeding $240 million to 4,132 Israeli companies harmed by the war, in an initiative they said helped support some 28,000 jobs and helped thousands of small and medium-sized businesses continue operating despite falling revenues, closures and labour shortages.

According to a report published by "Yedioth Ahronoth" , the Jewish community federations in North America raised about $92 million in donations over the past two and a half years, before using these funds in cooperation with financial institutions and banks to expand the volume of loans available to Israeli companies to more than $240 million.

The initiative relies on deploying donations as financing capital that allows loans to be extended to affected companies, instead of distributing the money as one-time grants, which allows the amounts repaid by borrowers to be reused to finance other companies.

The north and the Gaza periphery top the beneficiaries

According to the fund's data, about 48% of the loans went to companies in northern Israel and the communities adjacent to the Gaza Strip and the northern Negev region, areas directly affected by the repercussions of the war, the evacuations and the decline in economic activity.

The beneficiaries included companies whose owners or employees faced difficulties due to prolonged call-ups for reserve military service, as well as businesses operating in sectors severely affected, foremost among them tourism and hospitality.

The «Small Business Loan Fund in Israel» initiative was honoured during a ceremony hosted by Israeli President Isaac Herzog at his residence in Jerusalem, attended by officials responsible for the initiative, including Becky Caspi, first vice president of the Jewish community federations in North America.

Caspi said the initiative was launched in response to the needs of shop and business owners who faced difficulties in keeping their businesses going after the war broke out on 7 October 2023, explaining that the priority was to provide financing on easy terms enabling them to continue operating and pay employees' wages.

She added that thousands of companies had received assistance, and that the continued repayment of loans allows the fund to expand the circle of beneficiaries.

$80 million re-injected into new loans

One of the most prominent features of the initiative is the revolving financing model; the benefit of the funds does not end when the first company receives and repays its loan, but the recovered amounts are re-injected into new loans for other companies.

According to the fund's data, about 257 million shekels, equivalent to nearly $80 million, of the money repaid by previous borrowers was re-lent, without the need to raise additional donations to provide these amounts again.

The fund noted that the proportion of loans whose repayment was delayed by more than one year remained below 0.5% of the total capital it had lent, which it considered an indicator of the initiative's continued ability to finance affected companies despite economic pressures.

Israeli President Isaac Herzog said small and medium-sized businesses have faced exceptional challenges since the war broke out, not necessarily linked to poor management decisions or a lack of demand, but to the conditions the war imposed on economic activity. He added that supporting these companies helps protect livelihoods and preserve economic activity in affected communities.

Five platforms for financing Israeli companies

The initiative operates through five financing platforms targeting different segments of business owners. The "Bizzy" platform provides short-term digital loans to finance working capital, in cooperation with "Isracard" and "Phoenix," targeting small companies in areas near the northern and southern borders, and companies owned by reservists or whose revenues were damaged by the war.

As for the "Dromah–Tzafona" platform, it operates in cooperation with the Jewish Agency for Israel and supports companies employing between five and 29 workers in areas near the northern and southern borders.

The "Koreh Funds for Economic Development in Israel" focus on expanding access to credit for groups facing difficulties in accessing traditional financing, including Arab and Ethiopian business owners in Israel.

The "Ogen" organization offers low-interest loans, along with business mentoring, to small companies and entrepreneurs from among reservists who face difficulty obtaining sufficient financing from traditional financial institutions.

In turn, the "Spark Israel" platform connects lenders from various countries around the world with small companies in the less advantaged geographic and social areas within Israel, through interest-free loans that allow participants from abroad to finance business owners directly.