Despite the credit crisis, Bank Hapoalim (TASE: POLI) is increasing its credit to SMEs (small and medium enterprises), and will allocate resources designed to support and focus on these businesses. Bank Hapoalim CEO Zion Kenan will lead the program under the slogan, "Come, grow with us," and is calling 2012 the, "Year for small businesses".
In a joint effort between its Corporate Division, headed by Shimon Gal, and its Retail Banking division, headed by Lilach Asher-Topilsky, Bank Hapoalim will offer NIS 1 billion in credit for small and medium sized businesses beyond the amounts normally given.
"As one of the largest and leading banks in Israel, we have a responsibility to support and promote small businesses as a base from which we can grow. Our goal is to extend to small businesses not just money, but also business guidance and the appropriate financial tools that will help them grow and move the wheels of the economy. At the end of the day, these are the businesses that are creating new jobs, some of them in the periphery," Kenan told "Globes". Kenan presented the fund program to the Bank of Israel, which welcomed the idea.
Bank Hapoalim will establish a dedicated fund for loans to small businesses called, "Working to grow." In the first stage, the fund will be allocated NIS 100 million for small businesses in the crafts, industry and trade sectors, including authorized dealers and companies that have run into difficulties obtaining credit through traditional channels. A medium-size business is defined as a company with an annual turnover of up to NIS 25 million, and credit up to NIS 10 million. A small business is a company with an annual turnover of up to NIS 5 million. There are 500,000 small and medium-size businesses in Israel, which according to the Knesset's Research Center, account for 45% of business byproducts.
The fund will offer loans of up to five years that are capped at NIS 400,000 at prime +2%. In addition, they will be given a grace period of 12 months. The fund will focus on small businesses that are in need of relatively small amounts of credit, including less than NIS 100,000.
Easing of credit requirements
Collateral requirements for receiving loan approval will be significantly eased. Normally, small businesses are required to provide collateral in order to be approved for a line of credit. The fund will provide credit for businesses that normally have difficulty receiving credit approval without guarantors or other securities. They will need to provide a business plan, but won't need to have guarantors or other collateral other than the owner's guarantee.
In this way, the fund will enable these small companies to stabilize their ongoing activity, and will assist them in future growth. 160 Bank Hapoalim branches will offer the loans and Rayeed Abu Ree of Bank Hapoalim's Retail Division will be the fund's special project director.
At the same time, Bank Hapoalim will form a business club with a professional program that will offer a package including support and training, enrichment and mentoring sessions, and a connections to credit card clubs. Beyond that, Bank Hapoalim will also provide small businesses with free financial business guidance from consultants at specialized companies, and will provide the tools necessary to handle their ongoing financial needs and to run their companies more efficiently.
In addition, Bank Hapoalim will cooperate with organizations, such as the Manufacturer's Association and the Histadrut (General Federation of Labor in Israel), to form joint funds that will offer additional loans to small businesses. The loans could be used to develop and expand businesses, as well as for ongoing operations.
Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2012
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