The government is expected to give loans to businesses at risk with a state guarantee of 60%

In the coming days, the Risk Loan Fund is expected to start operating, where a state guarantee of 60% will be given instead of 15% on the total loan portfolio. These are loans to businesses that have so far failed to earn the credit they need to deal with the Corona crisis.
The prevailing claim is that the current loan fund - of which NIS 13 billion in loans has already been distributed to small and medium businesses - does not meet the needs of several industries, especially restaurants, cafes and hotels.
According to this claim, a 15% state guarantee is not enough to address the banks' distress from providing credit to these industries - restaurants and cafes that many of them also close on a regular basis, and hotels, which will probably find it difficult to make money soon, due to a halt in incoming tourism.
For many weeks, the Finance Ministry has refused to present to the public and enter data on the types of businesses that succeed or fail to obtain credit from the fund. Now, an office analysis is challenging the claims of industry discrimination.
The Treasury says that so far, about 63,000 applications have been submitted for state guarantee loans, of which about 46,000 have been discussed, about 73% of applications submitted. Approximately 33,000 loan applications were approved, approximately 52% of applications submitted.
The analysis of loans by industry is based on applications submitted until the second half of May. At the time, although about two-thirds of the applications were approved, the number of applications approved was only 42%.
The data shows that many applications were approved in some industries, which, according to most estimates, hurt the crisis - retail stores such as bookstores, newspapers, office and stationery (58%) and sports and bicycle equipment stores (57%). Some businesses in these industries were able to increase their online activity during the crisis.
High approval rates also benefited some wholesale industries - for example, electrical supplies (64%) and jewelery, watches and gemstones (this branch was the peak of approvals - 70%).
The division into branches is based on the classification of the Central Bureau of Statistics. The affiliation of businesses to the industries is determined by their statement when opening their portfolio in VAT, upon the establishment of the business.
Higher than average approval rates were also found in "at-risk industries": 50% in the cafeteria industry, 51% in the restaurant industry, and 64% in the hotel and hospitality industry. Restaurants and cafes have filed about 2,100 applications in total, and other food service businesses are classified in industries such as private dining services (where 53% of applications are approved) and kiosks, booths and buffets (only 39%).
Travel agencies, where the crisis was hit early and severely, approved 50% of applications for loans. The remaining applications were rejected or not yet discussed - and their hearing may be rejected because of estimates that the chances of their approval are low.
Approval rates that are close to average but higher than those found in industries such as earthworks and road construction (47%), kindergartens (44%), and advertising (43%). Businesses in industries such as family homes and nurseries (36%) suffered from a particularly low approval rate, as well as industries in which many businesses could maintain most of their activities even when the economy was down - such as R&D in engineering and natural sciences (24%), R&D centers Software (27%), retail sales through mail and internet orders (29%) and construction initiatives (32%).
Finance Minister Israel Katz appealed to the Knesset Finance Committee last week to approve a 60% state guarantee (on the entire loan portfolio) for the establishment of the new track, which will be limited to NIS 4 billion.
Negotiations between the firm and the banks on the terms of the loans have already been conducted, and the terms under which the loans will be granted should be similar to those in the ordinary course.
The terms include a limitation on interest rates on loans (a prime plus 1.5% ceiling), as well as a government commitment to pay interest on the loan in the first year. The path to risk business will be distinguished under two conditions. First, the maximum loan will be NIS 10 million, instead of NIS 20 million on the regular track.
The loan fund has so far only applied for a little more than a tenth of the business in the economy. Meanwhile, the normal route in the loan fund is nearing completion - after loans have already been approved for about NIS 13 billion out of NIS 14 billion allocated.

Katz's application to the Finance Committee includes an increase of NIS 4 billion in this route - so that, together with the risk-averse business route, loans of NIS 22 billion can be granted on state guarantee.