The world over, small businesses are asking how they can find ‘easy’ loans which allow them to get going. Last night, I moderated the monthly meeting of JBNF, which addressed that topic and discussed three different, successful yet related approaches.

Before I start, it is no secret that more and more people these days are turning to crowd funding, which is great. However, it must be pointed, that this track is not all glory: For example:

• A business may end  up with lots of small investors, a potential problem to manage when you are low on manpower
• Regular investors force you to check your business model, an annoying but necessary process
• Crowd funding can force you to publish secret info on the internet

With that in mind, let us consider the organisations represented on the JBNF panel, all of which are nondenominational, while trying to place an emphasis on boosting development in peripheral areas throughout Israel.

PARTNERSHIP2GETHER programme brings together donors from overseas with struggling new set ups in the south and north of Israel. Operating for just over a decade, they have created over 5,000 positions of employment, whereby 98% of all loans are repaid. The requirements are minimalistic – a brief business plan from a recognised economist and that is about it. The value of loans range from 50,000 nis to around 350,000 nis: (US$1 = 3.7 nis)

The stories were fascinating. I was impressed by the character of one middle-aged lady, an expert sewer, who had explained to the adjudicating panel how in her community, traditionally people sit and watch TV while she makes up the items of clothing. She needed money for a couch and a screen. Duly given, her triumph forced her to return a few years with a second request – to help finance a larger studio. Interestingly, around 30% of the projects were in the area of agriculture.

The Israel Free Loan Association takes an even simpler approach. It does not believe in business plans that dwell further into the future than six months. Prove that  you have a need and they will give an interest free loan for up to 90,000 nis, which can be paid off over 45 months. They approve 92% of all applications and the rate of non-payment is less than 0.5%.

Joe Rosen, Associate Director, made a perceptive observation, which is probably true of all such groupings. The loan does not just support the creation of a new commercial formula. Suppliers gain a new customer. A family receives an income. There is an additional service for the immediate community. The treasury receives additional tax revenue. The knock-on effects, just as in good old-fashioned Keynesian economics, can be stupendous.

The KIEDF assumes that around 70% of new businesses fail to obtain loans from banks. The fund, backed by the AACI, has granted around 10,000 ‘impossible’ loans over twenty years, probably leading to 45,000 new jobs. As above, the paperwork is relatively pain-free, although the sums are frequently lower.

Is there a  common theme to all of this? Quite clearly, there are many good people out there who realise that to start up is not easy. Banks and governments and bureaucrats still do not get it right enough of the time. It is these benefactors or philanthropists or altruistic motivators who are changing the lives of local communities in Israel of whatever background for the better and for the long term.