In the wake of the recent round of fighting in Israel’s
south which imposed a heavy economic cost on the region’s businesses in damages and lost productivity, the Jerusalem-based Israel Free Loan Association (IFLA) (www.freeloan.org.il) has mobilized $1.5 million dollars in loan funds to be available to small businesses in need.
Since announcing the program in early December, just days after the ceasefire was declared, IFLA has already approved loans to over 50 small businesses that have suffered direct losses from Operation Pillar of Defense.
Founded in 1990, IFLA has distributed over 46,000 individual loans amounting to more than $170,000,000. The Association prides itself on strong fiscal management and identifying loan beneficiaries who will exercise savvy business skills so that they will not default on the loan. To date, it has a default rate of less than 0.5%.
“Since our founding, our mandate has been to identify ‘working poor’ Israelis in need and give them the tools to get back on their feet,” says Edward Cohen, Chairman of IFLA.
“The recent violence presented many small businesses and individuals with a desperate economic challenge and we take great pride that we can play our part in helping Israel’s south get on the road to recovery.”
The new loans have been made available through two gifts from the Legacy Heritage Fund and the Trudy and Bob Gottesman Fund amounting to just over $1.5 million.
Even while IFLA’s focus is currently on the south, Cohen says that they have not been distracted from their work on behalf of people all over the country. “Our guiding principle is that the ultimate level of charity is not just providing handouts but truly investing in those who receive our loans,” he says.
“The beneficiaries aren’t related to as charity cases but as partners and they are inspired by the motivation to build viable small businesses or stabilize their personal economic situation and return the loan as quickly as possible.”
IFLA operates with a defined list of criteria to identify those individuals and small companies who they feel will not default on their loans. “It is a recipe that has worked for over two decades and one that has allowed us to help many thousands of Israelis,” Cohen says.
In an effort to speed up the distribution of funds to the south, IFLA slightly relaxed its review process for business loan approvals, requiring only two guarantors on the loan, in place of the typical three.
The approved beneficiaries represented a diverse collection of individuals and small businesses including small shops and manufacturers as well as service providers such as hairdressers, carpenters and kindergartens.
All the affected businesses reported steep cash flow challenges resulting from halted income during the military campaign despite the fact that their expenses continued to accumulate.
IFLA’s actions in the south have been recognized by public officials as a symbol for how the country should respond and aid those who have been affected by the violence.
Member of Knesset and former Minister of Social Welfare Isaac Herzog said, "This timely initiative demonstrates the type of support that the people of the south need and deserve and will be instrumental in allowing individuals and businesses to recover from the financial and emotional traumas incurred during this recent military campaign.
"IFLA has created a model for financially assisting Israelis which encourages entrepreneurship and hard work on the part of the recipient and for this they deserve to be congratulated and supported."