Ogen, previously known as the Israel Free Loan Association, has appealed to the government in a request to join banks providing state-secured loans to struggling small businesses and nonprofit organizations.
Founded in 1990, Ogen became the first organization to receive an expanded Credit Provider License from the Finance Ministry's Capital Markets Authority in September 2019. The nonprofit's Israel Social Loan Fund, an impact investment fund, serves as the forerunner to the organization’s planned nonprofit bank.
"Now, in view of the difficult economic and social situation, the Ogen Group has recruited additional philanthropic and business organizations willing to provide credit for the benefit of businesses and nonprofits who find themselves in crisis as a result of the coronavirus outbreak," Ogen CEO Sagi Balasha and chairman Ofir Ozeri wrote in a letter to Finance Minister Moshe Kahlon, Economy Minister Eli Cohen and other finance officials.
Enabling Jerusalem-based Ogen to grant government-backed loans, Balasha and Ozeri said, will enable financial assistance characterized by a higher level of risk than the traditional banking system is willing to accept.
"We have witnessed many cases in recent days where businesses fail to obtain the assistance that the state intended to grant them, because they do not meet the business criteria of the credit provided by banks," said Balasha and Ozeri.
"A bank, as you know, is first and foremost a private business entity aiming to make profits for shareholders. There is no doubt in our hearts that if those businesses could have obtained state-guaranteed loans from social and nonprofit organizations, then the considerations in examining their credit applications would be fundamentally different, and so would the outcome."
According to data published by the Finance Ministry on Thursday, 19,130 of 27,230 applications for loans evaluated by banks have been approved to date, giving the green light to loans worth NIS 7.2 billion for small and medium-sized businesses. More than 50,000 applications for financial assistance have been submitted.
On Monday, the Knesset's Finance Committee approved the allocation of an additional NIS 6b. to the small and medium-sized business loan fund, bringing it a total of NIS 14b.
A wide-ranging survey published in late April by the Central Bureau of Statistics showed the increasing scope of damage to turnover for businesses across the country, resulting from restrictions placed on the economy to combat the coronavirus outbreak.
Approximately one-quarter (25.9%) of businesses reported decreased turnover ranging from 76% to 100% on April 22, compared to 22.5% on March 31. Among those hit hardest were businesses in the commerce and industry sectors, and businesses with under 100 employees (small and medium-sized firms).
Restrictions on economic activity have been significantly eased since the late-April survey, when 31.6% of business owners said their companies could survive for no more than one month unless limits were lifted.
Despite the easing of some restrictions, the ongoing closure of restaurants, bars, most hotels, event halls, theaters and tourism-related businesses continues to have a significant impact on the economy and the livelihoods of many families.