Gov’t launches cheap loan program for small businesses

The accountant-general’s department at the Finance Ministry, and the Small Business Authority of Israel of the Industry, Trade and Labor Ministry, published a tender on Monday for banks to provide loans to small and mediumsized businesses for four years, for which the government is providing a NIS 500-million guarantee.

“The granting of government-backed credit to small and medium-sized businesses is an extremely significant step. These loans will help thousands of businesses a year,” the Industry, Trade and Labor Ministry spokesperson’s office stated.

The plan calls for all existing funds for small and mediumsized businesses to be merged into one large new fund, through which the banks will leverage the state guarantee to more than NIS 2.5 billion.

The main novelty of the new tender is that small and medium-sized businesses in the setup stage will be eligible for much larger government guarantees. Bureaucratic changes will significantly shorten the time required to receive a loan.

The banks that will participate in the tender will be required to leverage five times the amount of funds they receive from the state, so that the total amount of credit that will be injected into the fund will be over NIS 2.5 billion.

In light of the complexity of the tender, and the large amount of funds the government is guaranteeing, the Industry, Trade and Labor Ministry and the Finance Ministry will hold a conference on January 25, 2012, in Jerusalem, where potential recipients can learn about the fund’s procedures and its implementation. The last date for recipients to bid for the tender is February 1, 2012.