For the first time, social NPO's can enjoy
attractive, convenient loan terms guaranteed by the State for
funding an investment or working capital in the NPO, and without
providing a personal guarantee.
The State Guarantee Fund for small and medium-sized businesses
recently announced that it is opening a new loan track for NPO's providing services to the government
in the fields of health, education and welfare, which will remain
in effect until further notice.
With this new track, NPO's will no longer be required to
provide a personal guarantee (which is required in respect of the
Fund's other loan tracks), but rather, will be required to
assign the funds to be paid to them in respect of their engagement
with the State to the lending bank in the event that the loan is
not repaid on schedule.
Loans in this track will be provided to social NPO's that
are providing services in the above-mentioned fields and that
comply with the following criteria, in addition to the rest of the
Fund's loan terms:
The NPO has an engagement in effect with the State (that is
valid for at least eight months after the submission of a loan
application) at a volume that is 120% higher than the volume of the
loan being requested;
xIf the NPO is receiving support by virtue of the Budget
Foundations Law, provided that not more than 50% of the NPO's
income during the two years preceding the submission of the loan
application originated from such support.
The State Guarantee Fund was established a few years ago by the
Ministry of Finance (the Accountant-General's Department) in
order to provide assistance to small and medium-sized businesses,
whether operating or being founded, in obtaining credit to finance
operating activities and growth. The Fund enables financing
entities to offer attractive, convenient terms to borrowers, such
as the provision of minimal collateral, relatively low interest
rates and convenient repayment schedules. The loans are provided by
financial entities, while the State undertakes to indemnify them if
the businesses default on loan repayments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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