The Struggles of Farmers and Café Owners Amid Ongoing Crisis in Israel

Rephael, a dedicated farmer in southern Israel, along with his three sons, has devoted his life to cultivating fruits and eggs to sell in nearby communities. However, following the distressing events of October 7, Rephael’s customer base was evacuated, leaving him without a source of income. Compounding his difficulties, his sons have been called up to serve in the military, rendering him unable to plant or harvest the crops that are vital for his business. In this challenging climate, Rephael has turned to a loan, hoping it will sustain his operations until he can welcome back his clientele.

Similarly, near the Lebanon border, Rachel manages a coffee house that employs eight part-time workers. The absence of tourists has significantly impacted her business, but Rachel remains committed to serving those in her community. While waiting for the return of the tourists, she has secured a loan to keep her café operational, providing a haven for local residents and soldiers who are receiving complimentary meals.

Both Rephael’s and Rachel’s businesses represent just two of over 1,300 establishments that have remained open thanks to the crucial support of loans granted through the Jewish Federation’s Israel Emergency Loan Fund, which was initiated in March amidst the escalating conflict.

Background on the Emergency Loan Fund

In response to the unprecedented economic strain following the events of October 7, the Jewish Federations of North America (JFNA) established the Loan Fund to assist struggling businesses. The crisis led to a near-total halt in economic activities throughout the Western Negev region and along the northern confrontation line. An estimated 140,000 residents were displaced from both the South and North, tourism plummeted, and around 300,000 reservists were mobilized, thereby withdrawing a staggering number of individuals from the workforce for prolonged durations.

The closure of a business has far-reaching emotional and financial consequences not only for the owners but also for employees, their families, and the broader community. As the threat of business closures loomed, the potential repercussions for human welfare and the local economy were alarming.

The Critical Need for Small Business Support

The Israeli economy was ill-equipped to handle this unexpected turmoil. Significant gaps in government support programs, coupled with the common hesitance of Israeli banks to issue loans to small businesses, created a dire need for accessible financial resources. This is where the Loan Fund steps in. It strategically channels philanthropic resources from North America to cater to a diverse range of small businesses across Israel’s economy.

Jewish Federations have mobilized a significant total of $70.4 million for emergency loan funds. Of this amount, $51.5 million has been allocated—or is soon to be allocated—by the Loan Fund to five strategic partners responsible for issuing and managing loans on behalf of the Federations. An additional $18.9 million has been earmarked directly by individual Federations and other contributors to support these loan initiatives.

A volunteer committee of financial executives, led by Jeff Schoenfeld of Brown Brothers Harriman & Co. and supported by professionals like Rebecca Caspi from JFNA, oversees these allocations. Each loan platform targets specific regions or sectors within the Israeli economy, and together they offer essential credit at scale to the varied tapestry of Israeli society and its economy.

To further enhance their support, the Loan Fund provides supplemental security for these loans, which allows partner institutions to negotiate favorable terms with banks to extend additional loans. This collaboration is projected to enable loans that are three to four times greater than the fund’s initial allocations. Furthermore, the Loan Fund empowers platforms to provide loans with lower interest rates through cost subsidies.

The Scale of Impact and Future Outlook

The loan platforms have successfully disbursed loans totaling $75 million to more than 1,300 businesses, ranging from individual entrepreneurs to small enterprises. Total loans are expected to exceed $200 million as further funds are allocated and utilized through these platforms. Loan amounts vary depending on the platform and generally range from under $20,000 to around $100,000.

As we approach the second anniversary of the events of October 7, the demand for business loans continues to escalate. The ongoing pressures of conflict with Hamas, Hezbollah, and Iran maintain a shadow over Israeli enterprises, forcing them to strive for survival in an increasingly difficult environment.

The Israeli economy confronts deep-rooted challenges, with growth projections hovering near zero for 2024, potential downgrades to the country’s credit rating, and mounting budget deficits. Moreover, many reservists—including business owners, employees, their spouses, and customers—remain on duty or face continuous deployments, leaving around 75,000 Israelis displaced and parts of the country experiencing complete economic standstill or severe disruption.

Starting a small business entails considerable risk; entrepreneurs pour their resources, passion, and aspirations into their ventures, which not only provide their families with a livelihood but also breathe life into their communities. The loans rendered via the Loan Fund serve as a critical lifeline, enabling business owners like Rephael and Rachel to uphold their dreams and the hopes of their employees during this unprecedented crisis. These funds exemplify the concept of tzedakah (charity) as recognized by Maimonides over 850 years ago, underscoring the lifework essence of small business operations.

How AI legalese decoder Can Assist

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With the help of AI legalese decoder, users can easily decipher contracts, understand their obligations, and recognize their rights. This adds an extra layer of security and satisfaction in their financial arrangements, alleviating stress during a time of uncertainty and enabling them to focus on sustaining their businesses. The tool is especially critical as these entrepreneurs work to navigate financial challenges and legal complexities, ensuring they secure every advantage in their efforts to rebuild and sustain their livelihoods.

Conclusion

As we continue into a period rife with challenges, the Jewish Federations’ Loan Fund will steadfastly provide crucial resources and unwavering solidarity to Rephael, Rachel, and countless others in Israel as they endeavor to maintain their businesses and the economic fabric of their communities.

Evan Hochberg is associate vice president and deputy director, Israel and Overseas, at Jewish Federations of North America.

Matthew Salter is director, Israel Emergency Loan Fund, at Jewish Federations of North America.