Gov't to increase help to small businesses

The Ministry of Industry, Trade and Labor plans to bring more banks into its small enterprises fund to shorten the time it takes to respond to requests for aid.

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February 15, 2007 21:35
1 minute read.
closed businesses 88 298

closed businesses 88 298. (photo credit: Ariel Jerozlimski)

 
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Small- and medium-sized businesses can expect more assistance from the government this year as the Ministry of Industry, Trade and Labor plans to bring more banks into its small enterprises fund to shorten the time it takes to respond to requests for aid. "The increased extent of the funding activities shows their necessity as an important source of credit for small businesses," said Tsvia Dori, manager of the ministry's financing administration. "The main problem for the fund is the time it takes to handle requests." The ministry currently works with three banks to provide loans to small and medium business - Otzar Hahayal, Mercantile and First International Bank, and said increasing that number would make the process more efficient. The procedure includes a comprehensive financial check on the businesses, which takes up to 15 days. This includes a presentation of all the borrower's earnings and information, and checks performed by the bank and the fund's management. Once these checks are completed, it takes an average of 45 days to process the loans, the Trade Ministry said. Still, a ministry survey showed that 58 percent of businesses that received loans were satisfied with the process, 35% were ambivalent, and 7% gave low evaluations for the procedures. The ministry said it helped 875 businesses in 2006 through its small enterprises fund after receiving 1,238 requests for assistance. In 2005, the fund received requests from 1,153 businesses. The fund extends loans of up to NIS 500,000 to businesses with fewer than 70 workers and turnovers of up to NIS 22 million. The state guarantees up to 70% of the bank loans. Between October 2003 and December 2006, the fund extended NIS 687m. in loans to 2,281 enterprises. The average loan, the ministry said, was NIS 300,000. Close to 60% of the transactions were repeat loans, 30% were new and 10% were linked loans. Last month, the government held a one day seminar at the Knesset aimed at highlighting the main issues facing the sector. Shmuel Rozenman, chairman of the Israel Small and Medium Enterprises Authority, said at the time these revolve around regulatory issues including those relating to credit, VAT and access to government tenders.

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