Bank Leumi on Monday announced the launch of a statebacked fund to provide about NIS 1 billion in annual loans to small and medium businesses.
“There is no doubt that the loans in the framework of the fund are a substantial addition to the basket of solutions and value prospects Leumi already offers for the benefit of small and medium businesses,” said Dan Cohen, the head of Leumi’s banking division.
Leumi won a four-year Finance Ministry tender to run the fund, which aims at business that have NIS 100 million or less in annual turnover.
Cohen said the decision to broaden its SME portfolio was a “strategic” one for the bank.
The fund will offer several types of loans, linked to shekels or dollars, with payback times ranging from one to five years, and interest rates depending on the specifics of the business in question.
SMEs account for about 99% of the private sector in Israel, are responsible for 50% of its output, and employ about 45% of all Israeli workers. They often have difficulties getting access to credit, or can only get it on very unfavorable terms.
The government guarantee aims to reduce the risk profile for lending to such businesses.
The fund is, notably, available to construction companies, part of a Finance Ministry attempt to boost the housing supply.