Israel will provide small businesses in the Arab sector loans amounting NIS 15 million

Small and medium-sized businesses employ 65% ​​of the labor force in the Arab sector - but the financing products in the economy are not tailored to them. This situation will be tried to change by a new fund owned by the state and a public association, and it will provide 250 loans amounting to NIS 15 million.
The fund was established by the Koret Funds Association and the Small Business Agency in the Ministry of Economy, and will provide a solution for registered, existing and new businesses that have not received a loan through the state-guaranteed fund in the past year, as well as for existing unlimited account or active enforcement claim.
The fund will support businesses dealing with the corona crisis by providing non-bank credit - up to NIS 100,000 per venture. Fund representatives will locate potential clients, review and approve appropriate applications, transfer loan funds approved to clients and collect repayments. The loans will be tailored to the characteristics and needs of the target audience, and will allow them to maintain and develop their business and their family's livelihood.
According to Ran Koiti, director of the Small and Medium Business Agency at the Ministry of Economy and Industry, the new fund will meet an extremely urgent need. "The financing products that exist in the market are not suitable for businesses in Arab society," says Koiti. "Arab-owned businesses focus on risky industries from the point of view of lenders, with most (60%) concentrated in two main industries, construction and trade, compared with 37% of Jewish-owned businesses."
A survey conducted by the Central Bureau of Statistics among businesses on the impact of the Corona virus crisis, showed that 45% -67% of businesses in the construction and trade industries reported more than 50% damage to business revenue during the crisis. Many of the Arab business owners have or have had restrictions or foreclosures on the bank account.
"Even if it's history - the moderated business gets credit," says Kiviti, adding: "The requirement for collateral is also difficult because businesses can not always provide it. To these barriers must be added the difficulty of dealing with the Israeli bureaucracy, as well as the lack of trust in state institutions.According to data from the Economic Council for Arab Society Development "It exceeds about NIS 20 billion. This amount is only about 2% of the credit portfolio to the public of all the banks, which is estimated at NIS 1 trillion, and in addition - most of it is given as credit to households and not business credit."
Kiviti also mentions data from the Accountant General's Division of the Ministry of Finance, which show that only about 13% of applications submitted by businesses for state-guaranteed loans during the Corona period were from businesses located in Arab localities, and of the approved loans only 11% were in Arab localities. The average loan amount given to businesses in the Arab population is about 30% lower than the national average and accordingly, the total amount of loans approved for these businesses is only 8% of the total amount of loans approved.
It is not for nothing that the Koret Funds Association was chosen to establish the fund. This is an association that has been providing microfinance loans for years, also in Arab society.
Hagit Rubinstein, VP of Koret Funds, said that "the corona has hit Arab businesses hard, even though they are almost never on the credit map in Israel. The fund will be tailored to the needs and characteristics of the target audience and will address the various barriers that prevent it from enjoying accessible credit. Our past experience in another program of the association, SAWA, which operates among Arab women with small businesses, proves that access to credit is a critical factor in the ability of small businesses to develop. Three years from the date of receipt of the loan, business revenues have risen on average by about 140%. The businesses that will receive a loan from the venture will be businesses with the potential for an increase in income of at least 20% within one year of receiving the loan. "