Business Loan Process | Criteria & Requirements
Procedures for obtaining an interest-free loan for small businesses
Loans are designated for small businesses throughout Israel. For the purposes of this loan, a small business is defined as having an average monthly turnover not exceeding NIS 150,000.
Procedures and criteria: (click here for Hebrew version)
1) Applicants must be age 22-67.
2) Applicants must include all of the paperwork specified here. (Hebrew list of documents to submit with the loan application for small businesses affected by the economic situation in Israel).
3) Applicant who is an owner of and/or partner in another business must submit data on all of the businesses. An applicant whose spouse manages a separate business must include complete data on the spouse’s business.
4) An applicant whose bank account is restricted or was restricted in the past will have to wait one year from removal of the restriction. Anyone who has filed for bankruptcy, has a file at Hotzaot LePoel, has a warning registered against his name in the banking system, or has a lien registered on his bank account, is not eligible for a loan from IFLA nor to sign as a guarantor for another applicant.
5) Loans can be up to NIS 90,000.
6) Loan applications must be submitted on an original application form or a form downloaded from the IFLA website.
7) All business loan applications must include a business plan prepared by a business advisor from the MAOF or MATI organizations or by an advisor approved by IFLA. Please check in advance with your advisor if they are approved to submit business plans.
IMPORTANT: All applications are approved by IFLA and there is no automatic guarantee that a loan application submitted by an approved business advisor will be approved for a loan. Decisions to approve or deny loan applications are made by IFLA and not by the business advisor. Approval of a business advisor does not in any way imply approval of the loan applications submitted by that advisor.
8) The Loan Committee may confirm or reject any application and decide on the amount of the loan without having to provide reasons for the decision.
9) After authorization of the request, a letter containing the detailed instructions and conditions will be sent to the applicant. No decisions will be given by telephone. Applicants must adhere to all of the instructions referring to signing of guarantors as well as remaining terms.
10) A one-time service charge of up to NIS 500 (dependent on the amount authorized) is to be paid upon receipt of the loan, as set out in detail in the loan authorization letter.
11) A loan applicant or current borrower may not be a guarantor. Each guarantor may sign for one loan only. A husband and wife cannot be guarantors for each other, nor can they be guarantors for two loans simultaneously. A guarantor may not sign for a borrower who lives together with him at the same address, nor can two guarantors live at the same address. Recipients of National Insurance Institute pension may not sign as a guarantor.
12) Loans are repaid through standing bank orders in 30 – 40 monthly payments (in accordance with size of loan). Repayments commence one month after receipt of the loan.
13) The borrower will be charged for bank charges incurred for any payment returned by the bank.
List of documents which must be submitted with the loan application:
(link to document list in Hebrew)
Complete the application forms precisely, and attach all of the following documents (Nos. 1-13).
1) Photocopy of Identity Card of both spouses (including address attachments).
2) Curriculum Vitae.
3) Authorization of opening a Value Added Tax file.
4) Abstract from Companies Registrar listing shareholders’ names, company directors and liens (registered companies only).
5) Copy of partnership agreement, authorization of partnership owners and list of official signatories (partnerships only).
6) Rental agreement for the business premises.
7) Audited Financial Report for the business signed by CPA/Tax Consultant for the past two calendar fiscal years and Depreciation Form for business and any additional business of the entrepreneur and/or spouse, including partnerships.
8) Detailed Trial Balance for the current year confirmed by CPA/Tax Consultant for the applicant business and any additional business owned by entrepreneur and spouse, including partnerships.
9) Obligo Report for the business bank accounts and private accounts, including current account balance, lines of credit, existing loans and collateral of all types.
10) Explanation on the business and its current difficulties and a detailed explanation for the use of the requested loan.
11) A detailed monthly forecast of the expenses and income of the business for the next 6 months and future orders (where applicable).
12) Details of other sources of family income.
The application with all the required attachments will be submitted to the Loan Committee for its decision. In the event that the application is authorized the borrower must submit the following:
1) A bank standing order, with the borrower signature and the bank’s approval. The borrower must also receive from the bank signed copies of the standing order.
2) Three guarantors are required for business loans.
The guarantors must be above the age of 22 and less than 67 and have worked in their current place of employment for at least 12 months.
Guarantors must present a clear copy of their Teudat Zehut (including the address attachment), their last salary slip with the employer’s signature and stamp, form 106 (in the event that the salary slip does not show length of employment or commencement date for employment) and home and place of employment phone numbers. Their net monthly income must be above NIS. 3,000. A self-employed guarantor must present an authorization from an accountant/tax consultant confirming a net average income of at least NIS 3,000 per month during the last 12 months.
Guarantors must not sign before receiving confirmation of their acceptability. The guarantors can sign at the IFLA offices or other locations specifically authorized by IFLA.
1) After completion of stages A and B borrowers are required to visit the IFLA office during reception hours. In addition all the partners and/or shareholders are required to come, as well. The borrower’s spouse can sign on the loan documentation either at the IFLA office or at a place authorized by IFLA and to attach a clear copy of the Teudat Zehut (including the address attachment) and last salary slip.
2) Borrowers must bring all the paperwork, the standing order confirmed by the bank and the service charge.
Loan Service Charge – 500 ₪
3) The check from IFLA is dated for the first Friday following the date of completion of the entire process.
Please read the above criteria carefully to prevent misunderstandings and unnecessary delays.
Click here for application form (in Hebrew)