New loan fund could save small Arab-Israeli businesses
Already fragile small Arab-Israeli businesses were hit especially hard by the pandemic and the ensuing economic crisis.
Israel's Economy Ministry, in cooperation with the Koret Economic Development Funds, has created a new fund for small business loans for the Arab sector. The fund stands at 15 million shekels ($6.6 million) and plans to provide loans of up to 100,000 shekels ($30,000) to businesses in the Arab sector that have trouble securing loans from banks or the government as part of its pandemic stimulus efforts.
The deep credit crisis is one of the causes of violence in Arab-Israeli society. Much of the enormous grey market for loans is controlled by criminal organizations. Failure to make payments can mean harassment, damage to business, shootings and even murder. According to police estimates, nearly half of the firearm incidents and a quarter of homicides in Israel's Arab society stem from business conflicts and failure to pay debt.
Of the 10% of all businesses in Israel that are Arab-owned, 96% are classified as small or even micro or household businesses. These businesses employ about 65% of the Arab workforce.
But the existing funding products in the market are not suited to these businesses and according to Finance Ministry data, the average loan given to businesses in the Arab sector is 30% lower than the national average.
