Israel Free Loan Association (IFLA)

IFLA provides financial breathing room and dignity to working Israelis facing financial hardship through a sustainable model of recyclable funds.
Location: Jerusalem , Israel
Year founded: 1990

Description

IFLA is one of the world's largest Jewish interest-free loan organizations and carries out its social responsibility through providing interest-free loans to working Israelis experiencing financial hardship. Through the provision of interest-free loans, IFLA not only provides some financial"breathing room," but it also provides dignity. Borrowers include individuals, large families, single-parent families, students, families with a live-in member with disabilities, small business owners, and more. The beauty of IFLA is that as monies are loaned out to people and then returned, those monies are then loaned out again and again to others, resulting in a sustainable and perpetual helping resource. Beyond the over 54,000 loans we have provided in our 25 year existence, there are hundreds of thousands more low income earning individuals and families in Israel who could benefit from our assistance. Additional philanthropic support (grants) will help us to expand our scope of activity and help more people. We are based in Israel and serve Israeli citizens, and we are also registered as a non profit in the U.S., Canada, and the U.K.
Interest Free Loans for Israel's "working poor"

About

Israel Free Loan Association provides interest-free loans to working Israelis facing financial hardship. A donation (or accumulation of donations by several donors) of at least $10,000 enables the establishment of a named loan fund, from which loans are provided to borrowers, repaid to the fund, and loaned out again in a cyclical manner, thus growing the loan fund's "helping value." IFLA manages hundred of named loan funds, and the more loan funds established, the more loans we are able to provide to working Israelis in need. Currently, thanks to a generous challenge grant, donations to IFLA in the amount of $25,000 or more will be matched by 50%, thus increasing the impact of the donation.

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What is the mission and purpose of this program?

The mission and purpose of this program is to provide financial "breathing room" to working Israelis facing financial hardship or small businesses struggling to survive or expand while providing a sense of dignity throughout the process.

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Program Description

Personal loans are in the amount of up to 30,000, while loans to small business owners are up to 90,000. Securities for these loans include the signing of guarantors. Loan repayment plans reflect the borrower's monthly income and family size, in order to make the repayment plan realistic and possible. As such, borrowers repay their loans at a rate of 99.8%, (default rate of 0.20%) enabling the recycling of these monies to be loaned out to others again and again over time.

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Demonstrated Need

With 20% of Israel's workforce living below the poverty line, many Israelis earn a paycheck yet are unable to cover many basic expenses. This includes large and single parent families. To establish or expand a small business, or to stabilize cash flow, an infusion of funds in required. That's where IFLA comes in to help. IFLA also provides loans to college students, as well as those in professional training courses, with these loans embodying the value of helping people help themselves, as they acquire a profession. Another category is families with a member with disabilities living at home. For them, interest free loans help cover expenses of drugs, equipment, or procedures not fully covered by the healthcare system.

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Program Accomplishments

IFLA loans have assisted students to become self-sufficient professionals, families to absorb the costs of necessary medical treatments, family life cycle events, establish small businesses, and more. The more loans we are able to provide, the more people will be assisted with dignity intact.

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How do you measure the success of your program?

To measure success, we continue to keep track of the loans we provide and the repayment of loans, so that we can re-use the monies to help additional people, and the way these loans have an impact on the borrowers. With such information, we are able to continue to adjust our program in accordance with the continually changing needs on the ground.

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Interest-Free Loans for Social Small Businesses

About

For 25 years, the Israel Free Loan Association (IFLA)
has enabled low-income Israelis to face economic challenges in a dignified
manner, helping them stand on their own feet. We have provided over 54,000
interest-free loans, amounting to over 920 million shekels (almost $240
million) in loans since 1990. We are approaching nearly 1 billion shekels of
financial assistance provided. Each dollar or shekel donated has been recycled
on average 4.5 times.

However there is still much

work ahead of us. According to recent studies, 19% of all Israeli families live

below the poverty line, and more than half of those (231,300 families) are

working families with at least one salaried family member. Small businesses

provide employment to almost half of all Israelis in the business sector, yet

they still find it difficult to acquire credit from banks. An interest-free loan from IFLA can mean the difference to an entrepreneur establishing or expanding a small business, thus providing the option of a livelihood for him or herself and family as well as those the business employs. As loans are provided to small business, the monies are then returned and loaned out again to others in a cyclical manner, so that the loan monies are never used up but rather continue to grow in impact.

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What is the mission and purpose of this program?

Interest-free loans to small businesses with a social benefit will help to establish or expand such businesses, or to see it through a tough financial time, assisting with cash flow or purchase of inventory. It will also help enable the facilitation of teh social benefit the entrepreneur has envisioned, which will help support him or her as well as the public in accrodance with teh business plan. This financial assistance will help secure the business, with the loan monies then being returned to IFLA to be lent out again to others. The establishment of a Natan Loan Fund for Social Businesses will make this possible.

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Program Description

Small business loans of up to 90,000 ILS are offered to eligible businesses and are then returned in up to 45 monthly repayments, with no penalty for early repayment. For establishment of a business, a business plan must be presented, prepared in consultation with a business adviser. Small businesses must have a monthly income of no more than 150,000 ILS per month. Borrowers also sign guarantors, who theoretically agree to step in and return the loan monies, should there be a default. This rarely happens, as legally, we must first exhaust every option to seek return from the borrower. Even once the matter has moved to a collection status, we only request return of the money loaned and forgive any automatic penalties or interest the collection agency requires. It is not our intent to penalize our borrowers. We are intent on assisting them.

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Demonstrated Need

Small businesses provide employment to almost half of all Israelis in the business sector, yet they still find it difficult to acquire credit from banks. Small businesses in Israel comprise roughly 65% of business in Israel, yet they have access to only 13% of credit available to businesses. Banks and other financial institutions often turn these businesses away, as they are too much of a risk. IFLA provides the capital for these businesses, and our follow up with borrowers shows that our business borrowers have a higher rate of survival than other small businesses. Although our loan monies continue to be recycled, and our loan repayment
rate is 99.83%, manageable repayments by our borrowers take time, and we
require the support of additional support to enable us to grow our scope of
assistance in real time, as needed.


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Program Accomplishments

30% of all of IFLA's loan activity is comprised of small business loans. In 2014, IFLA provided 3,400 interest-free loans, with a special 350 emergency small business loans for businesses in southern Israel hardest hit by that summer's military conflict and constant rocket attack. These loans helped these businesses survive their cash flow crises, when they were basically shut down for the summer. IFLA has provided similar assistance in previous situations throughout the years and continues to respond to the ever changing needs on the ground. IFLA has provided over 5,300 small business loans in the cumulative value of over 294 million ILS, thanks to our model of recycling funds.

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How do you measure the success of your program?

We evaluate program
success in several ways. Our collections department follows up with borrowers
to help them overcome the obstacles of repayment, often arranging more
realistic repayment plans with them, based on their situations. We evaluate the
efficacy of serving various borrower categories (such small
businesses) through surveys conducted by graduate students of Hebrew
University's master's program in Nonprofit Management. Additional research is
facilitated through volunteers, on the impact of small business loans. We also
monitor poverty statistics, the working poor, and related topics, to adjust to
the changing needs. We have now put a stronger emphasis on borrower follow up
to chart their success in light of their loan and use the data to continue to
improve upon our work. We will measure
the impact and results of Natan grant funds by the number of loans provided,
by input from borrowers on how the loans have assisted them and their businesses, and by the loan
fund’s increasing “helping value” (number of times the monies have been recycled) over time.

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