The Ministry of Industry, Trade and Labor today published a tender among the banks to set up a NIS 3 billion credit line for small and mid-sized enterprises. The government will provide NIS 500 million, which the banks will leverage the fund to NIS 3 billion in order to alleviate the credit crunch in Israel caused by the debt crisis in Europe and global economic slowdown.
The fund aims to help small and mid-sized enterprises with the means to repay loans, but which cannot obtain bank credit. The fund will extend loans, 70% of which will be backed by the government. The government will also subsidize the banks' business background checks. This will change the loans' risk profile for the banks, thereby giving them the incentive to extend credit to small and mid-sized enterprises, something that the banks have avoided doing.
The Ministry of Industry, Trade and Labor said that the fund would extend NIS 2 billion in loans to 6,500 small enterprises and NIS 1.8 billion to 650 mid-sized enterprises.
"We'll continue to examine ways to increase credit to small and mid-sized enterprises, including through regulation, while creating a structure that will encourage the banks to grant more loans and financing to small and mid-sized enterprises," said Minister of Industry, Trade and Labor Shalom Simhon.
Published by Globes [online], Israel business news - www.globes-online.com - on December 21, 2011
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