Ogen gives loans to businesses, nonprofits due to COVID-19 financial loss

The loans will be government backed with an interest rate of 3.1%, and all borrowers will pay the same consistent rate.

Illustrative photo of Israeli money (photo credit: MARC ISRAEL SELLEM)
Illustrative photo of Israeli money
(photo credit: MARC ISRAEL SELLEM)
Israeli lender and social-finance initiative the Ogen Group will begin making loans to nonprofits and small businesses who have suffered due to the economic damage of the coronavirus pandemic, marking the first time a-non profit organization is being awarded with this right, the Finance Ministry confirmed Sunday.
This will be done by entering the State Guarantee Fund, which was established at the end of March, and which has so far approved around NIS 16.3 billion in loans to over 45,000 different businesses.
The move, which puts Ogen Group on par with major banks, brings it one step closer towards becoming Israel's first non-profit social bank. 
Ogen, which itself is made up of five different nonprofits, will be able to use government guarantees to increase the flow and supply of capital to nonprofits and small businesses in the market, and will also enable the organization to raise additional funds from philanthropy as well as impact and institutional investors. This, in turn, enables them to better support at-risk nonprofits and small businesses.
The loans will be government backed with an interest rate of 3.1% (combining the Bank of Israel Prime rate, which at the time of writing is 1.6%, with an additional 1.5%), and all borrowers will pay the same consistent rate.
In September 2019, Ogen received an Expanded Credit Services Provider License, which allows small businesses, first-time home buyers and nonprofits to have access to advanced, fixed low-interest loans, which was a major milestone in their lending operations.
However, their operations took on a new focus with the coronavirus outbreak, which saw major financial instability and soaring  unemployment rates. In response, the Ogen Group started raising millions for emergency survival loans as well as financial mentorships. This resulted in raising NIS 140 million from donors and impact investors. The organization now manages a lending capital total of NIS 400 million, and seeks to raise a further NIS 100 million.
“Adding additional credit providers to the State Guarantee Fund stems from the need to provide a broad response to the needs of small- and medium-sized businesses which have been damaged by the crisis," accountant-general Roni Hizkiyahu said in a statement.
"Ogen’s inclusion increases the supply of credit dedicated to very small businesses and nonprofit organizations. This is an important component in supporting the populations and people who are suffering the most from the crisis. This step builds on additional measures taken recently to ease and shorten the process for getting a loan... I call on business to apply for loans to help get through this complicated period.”
“I thank the Finance Ministry for enabling Ogen to make life-changing loans with government guarantees," Ogen Group CEO Sagi Balasha said.
"This challenging period has sparked large demands for credit, and thousands of people who’ve been propelled into difficulty have turned to us for help," he said. "The fact that Ogen operates as a nonprofit allows us to help the self-employed, the small businesses and nonprofits whom the banks refuse due to their own profitability.
"As such, I believe that Ogen really fulfills the purpose of the government fund: to help people. Other credit providers through the State Guarantee Fund support businesses with a turnover of NIS 100 million; we give loans to those with a turnover of up to NIS 5 million, and who are the principal sufferers from the coronavirus crisis,” Balasha said.
“Although Ogen lends to business classed as high-risk by the banks, our default rate is negligible," Ogen Group chairman Ofir Ozeri explained.
"People can distinguish a loan that’s given to them from a place of pure goodwill, and do everything to repay so that funds can be recycled for the sake of more borrowers in need in the future. We’re delighted that the Finance Ministry has recognized the importance of Ogen’s work and the professional standard of our underwriting," he said. 
"Thanks to State Guarantees, we can continue raising funds from philanthropy and investors who want to show solidarity, and support those who’ve been devastated by the crisis. We’re proud of Ogen’s ability to provide a complete response package to people in need, including not just loans but financial guidance and mentoring through experienced senior managers from Israel’s top companies, who volunteer their time to support small business owners.”