Majority of small businesses use the credit line given to them by the bank

The absolute majority of small businesses take advantage of the credit line given to them by the bank. From an inspection conducted by the fintech company Bizzy in the first quarter of 2023, it emerged that 97% of the small businesses took advantage of the credit limit that was given to them, and only 3% did not take advantage of it. The inspection included almost 1,000 bank accounts of about 800 small businesses.
The sample data also shows that the effective credit cost increased by 14% during the quarter. Thus, while the cost that the small business pays for the credit line amounted to 15.3% on average in the last quarter of 2022, in the first quarter of 2023 the average cost climbed to 17.5%. This cost consists not only of the interest that the business pays on the utilized framework, but also of the credit allocation fee that the banks charge. The credit allocation fee in most banks amounts to about 2% of the approved frame and is charged on the full frame even if the business only uses part of it.
The test shows that about 68% of the small businesses have a credit line at the bank. About 22% of them have a credit framework of up to NIS 50 thousand; About 15% of them hold between NIS 50,000 and NIS 100,000; 12% of them with a credit limit of between NIS 100,000 and NIS 200,000; And 12% own between NIS 200,000 and NIS 500,000. Only about 7% of the businesses have a framework of over NIS 500,000.
Most of the small businesses in Israel are required to have a credit line in order to exist, among other things in light of the accepted payment conditions in Israel, of "Current Plus". Bizzy points out that in many cases the credit limit is given or increased when the client is in cash flow difficulties and his ability to bargain with the bank is almost non-existent, as any deviation from the limit puts the business at risk of refunding charges by the bank and harming the business's credit rating. However, Bizzy claims that despite the importance of the issue, there is no official figure regarding the effective cost paid by small businesses to the bank.
Bizzy is a fintech company that has a license to provide extended credit from the Capital Market Authority. The company began operating in January 2022, when it offered credit to small and medium-sized businesses. The CEO of the company is Sa'ar Zakharish, who served until 2022 as the head of the digital department at Bank Hapoalim.
The technology on which the platform is based is from the American fintech company Bluevine, which was founded by the Israelis - Eyal Lipshitz, Nir Keller and Moti Shatner. Bizzy has so far raised $7.5 million from Blue Wine, the Phoenix Group and the foreign financing company Bankai Orshi.