Small Business Loan Funds

The Loan Funds Initiative is one of the Jewish Agency's most successful programs for creating employment opportunities, impacting Israeli society and stimulating the economy in Jerusalem, the Negev and the Galilee.

What Are The Jewish Agency Loan Funds?

The Jewish Agency’s Loan Funds were initiated by Jewish communities in the United States, and have been successfully developing Israel’s economy since 2001. The Loan Funds program is operated by The Jewish Agency’s Partnerships Unit, which also oversees Partnership2Gether and a variety of projects that build connections between Israeli communities and Jewish communities around the world. Our most notable partners in our Loan Fund initiative are the Jewish communities of New York, Miami, MetroWest New Jersey, Pittsburgh, Detroit, and the Central Area Consortium.

The Loan Funds assist entrepreneurs and business owners in Israel to open or expand their businesses, through loans with highly attractive conditions. The Jewish Agency acts as a partial guarantor for the loans, to support those businesses that otherwise would have a difficult time qualifying for loans or presenting the necessary collateral for them.

There are currently six different Jewish Agency loan funds serving Israel, including full coverage of Israel’s geographic and cultural periphery areas. We place particular focus on target populations including business owners and entrepreneurs in the Negev, Galilee, and Jerusalem; new immigrants to Israel; Ethiopian community; the ultra-Orthodox population; and the Arab-Israeli population.
 
Why Loan Funds?
 
The goals of the Jewish Agency Loan Funds include:
  • Strengthening Israeli society
  • Narrowing socio-economic gaps and uplifting vulnerable populations
  • Encouraging the creation of new small and medium-size businesses
  • Expanding the activity of existing businesses by upgrading their technology and operations
  • Creating jobs, reducing unemployment, and stimulating economic growth
  • Improving quality of life for residents of Israel’s social and geographic peripheries
  • Building pride and a sense of personal investment in Israel for Jewish communities worldwide

From an idea to a successful business - How Does It Work?

The process starts with the entrepreneur contacting an independent business advisor or MATI centers (entrepreneurship development centers) around Israel. The business concept is examined and an application for basic approval is submitted. The Jewish Agency considers whether the entrepreneur satisfies the preset criteria and the bank looks at financial risks involved.

If basic approval is obtained by the two parties, the entrepreneur has to apply to MATI or the advisor for help with preparing a business plan that describes the idea and its the marketing and financial potential.

The business plans are submitted to the Jewish Agency officials and bank officials, and are discussed by a public committee at prearranged times. The public committee comprises representatives of the Jewish Agency and of the lending bank, and the chairman is a public representative. The committee discussions include examination of the business plan and meetings with the entrepreneurs and the supporting advisor. If the loan is approved, the Jewish Agency becomes a guarantor for the bank loan for the amount set by the committee.

The Jewish Agency signs agreements with the bank and assumes partial financial responsibility in cases of non-payment. The fund offers excellent conditions including, as aforesaid, provision of the Jewish Agency's guarantee without which it is sometimes difficult to obtain regular commercial loans. The loan fund payments are refunded to the Jewish Agency and serve as capital which is subsequently deposited at the bank and serves as collateral for providing additional loans in the future.

Why the Jewish Agency?
 
The Jewish Agency brings vast experience to the fields of community-building, leadership training, uplifting of vulnerable Jewish communities, and the building of Israel.
 
The Jewish Agency’s agreements with the banks allow us to leverage donations to four times their value: every dollar contributed makes possible a loan of four dollars. The loan amounts vary from 50,000 to 350,000 NIS ($14,000 - $95,000), and average at about 150,000 NIS ($40,000).
 
Compared to those of other loan funds, The Jewish Agency’s loan approval process is simple and quick. Additionally, the business owner is guided throughout the process by a loan fund coordinator, who uses an innovative internet loan fund-management system. Our Funds are based on a revolving collateral pool: each loan paid off allows the granting of a new loan.
 
The Jewish Agency Loan Funds enjoy an exceptionally high pay-back rate of 98 percent. As part of the application process, the Loan Fund committee (a public board) interviews the applicant and reviews his or her business plan. The committee is led by a well-connected volunteer chairperson with vast business experience.
 
Over the past ten years, The Jewish Agency has assisted about 1,100 businesses and created about 5,500 jobs. So far, our loan beneficiaries have received a total of over 170 million NIS in loans (over $47 million).

For further information:

 

Small Business Loan Funds Experiences

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