The (Loan) Fund with Governmental Guarantee for Small and Medium Sized Businesses
The Fund, which began operating in 2003 was founded with the purpose of helping small and medium size businesses in all industries throughout Israel.
It works in cooperation with the Israeli Treasury, four banks that provide the loans; Bank Mizrachi, Bank Mercantile, Bank Leumi and Bank Otzar HaChayal, and two firms that coordinate The Fund on behalf of the Government- BDSK Accounting firm and GSE financial advisory firm.
The loan is given through one of the above mentioned authorized banks that works in conjunction with The Fund. The Israeli government acts as the guarantor for between 70% and 85% of the loan. This gives the bank strong financial assurance that the loan will be repaid. This in turn raises the probability that those applying for the loan will receive a positive reply to their request.
And the results are astounding-
Since 2012 alone, The Fund has granted more than 7.2 billion shekels in loans to over 15,000 small businesses and to over 900 medium size businesses.
The Fund provides loans for
· Businesses in set up stage
· Existing businesses that require working capital
· Existing businesses that wish to invest in expanding their operations and increasing business growth
Businesses in Set Up Stage
The State of Israel wishes to encourage business enterprise. With this in mind, The Fund provides entrepreneurs with a loan of up to 500,000 shekels, with low interest rates and tailor made repayment structures.
The loan will be given upon approval from the credit committee, the recommendation of the appropriate financial body and the recommendation of the bank.
What is a Business in Set Up Stage?
One of the following-
· A business that has yet to begin operating
· A business that until now has been classified by Israeli law as “Osek Patur” and wishes to expand its operations and transform to an “Osek Murshe” or to a corporation, as defined under Israeli law
· An existing business that has yet to make use of any credit finance
· An existing business that wishes to relocate for strategic purposes, on condition that its total sales turnover since its date of inception has not exceeded half a million shekels
· An entity wishing to acquire an existing business may receive a loan of up to 35% of the purchase price of the business
Security Required by the Bank
For loans of up to 300,000 shekels, the business is required to provide the bank with securities valued at 10% of the loan.
For loans above 300,000 shekels, the business is required to provide the bank with securities valued at 25% of the amount above 300,000 shekels (and 10% of the amount up to 300,000 shekels).
The business owners are required to become personal guarantors on the full amount of the loan.
Loan Repayment Period
Loan repayments can be made for up to a five year period.
Interest Rates
Interest rates on the loan are usually the market prime rate + 3.5%.
Existing Businesses that Require Working Capital
The Fund provides loans to existing businesses that have liquidity issues or otherwise need finance for their continual business operations. The working capital may be used for things such as bridging finance, restocking, importing, marketing and hiring staff and even repaying outstanding business loans.
Which business can apply for a Working Capital Loan?
· Businesses with an annual sales turnover of up to 6.25 million shekels can apply for a loan of up to 500,000 shekels.
· Businesses with an annual sales turnover between 6.25 million shekels and 100 million shekels can apply for a loan of up to 8% of the previous financial year’s annual sales turnover amount. This translates to up to 8 million shekels in loans.
Security Required by Bank
The business is required to provide the bank with securities valued at 25% of the loan.
The business owners are required to become personal guarantors on the full amount of the loan.
Loan Repayment Period
Loan repayments can be made for up to a five year period.
Interest Rates
Interest rates on the loan are usually the market prime rate + 3.5%.
Existing businesses that wish to invest in expanding their operations and increasing business growth
The Fund provides loans to existing businesses that wish to expand their enterprises. The loan may be used for investing in machinery and buildings, research and development, for example. As opposed to working capital loans, the purpose of this type of financing is to help businesses expand and develop.
Which business can apply for a loan to invest in its business?
· Businesses with an annual sales turnover of up to 6.25 million shekels can apply for a loan of up to 500,000 shekels.
· Businesses with an annual sales turnover between 6.25 million shekels and 100 million shekels can apply for a loan of up to 8% of the previous financial year’s annual sales turnover amount. This translates to up to 8 million shekels in loans.
Security Required by Bank
The business is required to provide the bank with securities valued at 25% of the loan.
The business is required to invest at least 20% of the entire planned investment amount before receiving the loan.
Loan Repayment Period
Loan repayments can be made for up to a five year period.
Interest Rates
Interest rates on the loan are usually the market prime rate + 3.5%.
How Trust-Group Can Help You and Your Business
The process of applying for a loan through The Fund can be lengthy and frustrating. As often is the case in Israel, there is a lot of bureaucracy that complicates and hinders the process for an inexperienced person.
A business applying for a loan must deal with at least three different financial bodies; many documents are required to be presented; an in depth questionnaire in Hebrew must be answered; a business plan must be created in Hebrew; the application must pass no less than three different committees; and the list goes on.
What’s more, if an application gets rejected by The Fund, the business must wait at least six months until it can reapply for a loan. And experience has shown that a business that did not receive a loan on its first application is very unlikely to receive one in the future.
And that is where Trust-Group’s services come into action to help you.
We have years of experience in assisting dozens of businesses to receive the financing they require.
By knowing and dealing with the relevant financial bodies that are involved in the decision making, we understand how to get the results our clients want.
We know how to represent our clients in a most convincing way.
We know who to deal with to make sure the application is dealt with quickly and problem free.
Trust-Group’s experts will work on your behalf, making the application a quick, smooth and successful process.
We will-
· listen to what your business needs are and if required, give you sound financial advice
· help you to decide exactly how much finance your business requires and on what terms
· help you gather all relevant information and documentation
· assist you in filling out in Hebrew the detailed questionnaire
· prepare an outstanding business plan in Hebrew that will convince The Fund to give you a loan
· personally deal with the relevant financial bodies involved in the application process
· keep you updated at every step of the process until the funds are in your bank account
With Trust-Group working on your business’ behalf, you can be assured that everything will be attended to in the most professional, efficient and satisfying way, just as you are used to in your native country.
Furthermore, all dealings between Trust-Group and its clients can be conducted in English.
To find out if your business is eligible to receive a loan through The Fund, or for further enquiries fill out your details and we will contact you shortly.