Small Business Loan Funds – Jewish Agency for Israel


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 the priority regions of the Negev and the Galilee.

Guarantors for Success

Many Israelis with entrepreneurial initiative and sound business ideas lack the collateral necessary to receive regular bank loans. The demands of the regular capital market prevent them from raising the initial capital needed to open their business. New immigrants and economically disadvantaged native-born Israelis thus stand little chance of receiving bank financing, no matter how promising their initiative may be.

The Jewish Agency Loan Fund addresses this unmet need and contracts with the banks to undertake part of the financial responsibility in the event of default of repayment. The Jewish Agency guarantees the loans if the applicant falls within the designated criteria.

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.

Maintaining Growth

Over 1000 applicants have received loans over the last years, and many businesses are now flourishing in the Negev and the Galilee, from bakeries to high tech companies. At the same, these businesses are providing employment opportunities for local residents.

The Jewish Agency encourages entrepreneurs and business owners to continue benefiting from the loan funds, to establish and consolidate successful businesses and to contribute to the prosperity of other communities in the Negev, the Galilee and Jerusalem.

The Jewish Agency, with the assistance of the Jewish Federations of North America, currently operates 7 loans funds around Israel. These provide entrepreneurs and small business owners with the initial capital necessary for setting up a new business or expanding an existing venture.

In all funds repayment is spread over 6 years, and a grace period (interest payments only) of up to a year can be approved. The value of the loan is up to NIS 300,000, subject to Fund terms.

  • The Ness Fund which operates in the Negev, on the initiative of Central New Jersey together with the Miami Jewish community.
  • The Detroit Development Fund operates, with donations from the Detroit community, in the area of Nazareth Ilit, Migdal HaEmek and the Jezreel Valley Regional Council.
  • The Pittsburgh Fund operates, with donations from the Pittsburgh community, in the area of Carmiel and the Misgav Regional Council.
  • The Western Galilee Fund, established by the Central Communities of the United States, provides assistance for businesses in the region of Akko and the Matteh Asher Regional Council.
  • The loan funds established by New York communities include: The KATI Jerusalem Fund which supports initiatives in the Jerusalem and Matteh Yehuda area, and the New York Fund for Israel which provides solutions for new immigrants, many of whom originate from the Caucasus region and Ethiopia, and helps women all over Israel.

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