The State Guarantee Fund for Small Businesses


The Fund was initiated with the goal of helping establish or expand small businesses in all sectors of the economy. The government serves as the loan guarantor for bank loans, so that the banks will extend loans to small businesses despite insufficient collateral. Instead of collateral, the banks require a detailed business plan, on the basis of which the application for credit is judged.
The Fund is managed by an ISMEA (Israel Small & Medium Enterprises Authority) steering committee, on which the Ministries of Finance and Industry and Trade are also represented.
During its first three years of operation, the Fund has guaranteed loans to some 2,800 small businesses, with a total of over NIS 600 million. 


Loan Terms*

- The credit limit for a single business is NIS 500,000.
- The loan is given for a period of up to 5 years for the purchase of equipment and one year for operating capital.
- The borrower need provide only the following collateral: mortgage of the fixed assets financed by the loan and a personal guarantee.
- The business owner must invest his or her own capital at a rate of no less than 25% of the total credit approved.
- Interest: Prime linked + market interest rate.
- The loan is given through Bank Otzar Hachayal and FIBI.


Eligibility terms for a loan are as follows:

- The business may employ no more than 70 workers and its annual turnover may not exceed $5 million.
- The requested credit line may only serve new business activity, i.e., establishing a new business or expanding an existing one. It may not be used to finance real estate purchases and construction, or to purchase existing businesses.

*Subject to possible changes, as well as all the figures, terms and conditions quoted on this page.


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