preface

BDO Israel
DOING BUSINESS IN ISRAEL
The loan extended to a single business is for approximately NIS
500,000, for a five-year period, to fund the purchase of equipment or
one year's working capital. The borrower is required to furnish the bank
with a lien on the equipment financed by the loan, as well as personal
guarantees. To be eligible for the loan, the business must meet certain
criteria, as follows:
♦ The total number of employees must not exceed 70 persons and
annual turnover must not exceed NIS 22,000,000.
♦ The loan should be used solely for new activities: establishing a new
business or expanding an existing one. The funds should not be used
for the purchase real estate, construction activities, or the acquisition
of an existing business.
♦ Paid-in capital should not be less than 20% of the loan.
The fund is currently managed by three commercial banks. The State
guarantees up to 70% of each loan amount and up to 30% of the entire
loan portfolio.
7.6.2. State-Guaranteed Loans Offered to Medium-Sized Businesses
The Fund for Establishing and Supporting the Operation of Medium-
Sized Businesses operated by the Ministry of Industry, Trade and Labor,
offers State-guaranteed loans of up to 8% of an entity's annual turnover.
The program is intended for medium-sized businesses with an annual
sales turnover of NIS 22-100 m. The scope of collateral security
required is 25%, while the Government extends a guarantee of up to
70% of the loan amount. Furthermore, the owners' personal guarantee is
required.
The loan is for a term of up to five years, with a one-year extended
grace period for repayment of the principal. Interest is at the customary
rate prevailing in the banking system on such loans. The Fund is
operated by commercial banks.
7.6.3. Assistance to industrial plants in financial difficulties
Pursuant to a government resolution, a committee of Ministry directorgenerals
was formed to review industrial plants and submit
recommendations to a ministerial team.
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