A document submitted today to the Knesset Finance Committee ahead of the debate on the budget of the fund for loan guarantees to businesses alleges that most of the aid goes to large businesses and factories, at the expense of small and medium-size businesses.
The document, which was compiled by the Manufacturers Association, reveals that the fund assists businesses with financial difficulties that prevent them from providing banks with the securities to raise further loans. The fund received 1,200 loan applications in 2006, of 760 which were approved. The Manufacturers Association noted that the fund generally operated efficiently, and that businesses that met the criteria were usually granted loans within a matter of weeks.
However, the Manufacturers Association has called for state guarantees to be increased from 75% to 85% and the doubling of the maximum to NIS 1 million, so that small and medium-sized factories can receive aid not just to finance their working capital but also to make investments.
The manufacturers have also called for additional relief measures including the lowering of interest rates on the principle, or setting a progressive rate commensurate with the size of the loan; the release of securities in proportion to the pace of repayment; and the increasing of the fund's total budget from the current NIS 24 million.
According to a survey conducted by the fund, 86% of the businesses that received loans increased their output, half of them by more than 20%. The loans granted also helped create 5,500 jobs.
Published by Globes [online], Israel business news - www.globes.co.il - on April 29, 2007
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