A. The Management Concept

• A Steering Committee:  It is important that a loan fund of the proposed size and scope be supervised by a steering committee headed by a prominent Israeli economist, representatives of the UJC, the Jewish Agency and TSAFONA Development. The committee will hire outside consultants experienced in the field of providing assistance to businesses.
  
• The steering committee will set the strategy for the aid given to businesses, including   financial and managerial issues. The steering committee will also examine the gamut of aid funds and other organizations operating to provide economic assistance in the North and consider these factors when determining the aid format and possible cooperative ventures with one or more of these additional agencies/organizations.
  
• The steering committee will establish a number of issue-oriented sub-committees that will be responsible for the loan fund's regular operations and providing specific solutions to various issues that might arise throughout the process.

B. Operations

• The proposed fund will operate with assistance from local entrepreneur consultant agencies throughout the North
  
• The fund will announce its establishment through the media as well as the various aid programs available, and invite eligible businesses to apply.

In order to provide quick solutions for those businesses that have already lost most of their summer season, it is very important that a simultaneous effort be made in a large number of communities with as little "red tape" as possible. 

C. A two-track system will be offered for aid by the loan fund:

1. Operating Capital Loans - the war related needs of Northern businesses revolve primarily
   around the loss of operating capital during the latest hostilities. While the war drove their
   income to nothing, business expenses continued. For those in need, the fund will provide a loan in accordance with the applicant's monthly volume, subject to review of the business' accounting records that certify and authenticate the size said volume.
   
2. Business Development Loans - this track will provide loans for business development or for the establishment of a new business. Here, the staff will examine the applicant's business plan or development program. Assistance will be provided and a mentor appointed to assist the applicant in preparing a suitable business plan.

Following initial approval and presentation of documents for the suitable aid track, documents will be examined and aid approved within as short a period as possible. Initially, the fund will employ consultants to examine the individual business programs and respond to a maximum number of applicants simultaneously. It is important that a maximum time frame be determined by which the consultants would be expected to reply to fund applicants.

Businesses that receive development or investment loans will receive, free of charge, 30 mandatory hours of mentoring and training pertaining to implementation of the business plan.

D. The Economic Framework

The loan fund's economic concept will be based upon the following principles:

1. The fund will be what is known as an "Evergreen" fund, i.e. the funds returned to the fund and loan repayments will serve to provide further assistance to additional businesses.
   
2. During Stage I, the emphasis will be placed on Operating Capital Loans in order to meet the immediate needs of small businesses in the North.
   
3. During Stage I, the loan fund will issue funding directly from its own capital. In this manner, we can shorten considerably response time, and provide direct and rapid service to businesses in need of aid.
   
4. Development and Investment Loans will be allocated in Stage II. During Stage II the proposed loan Fund will enter into cooperative agreements with various financial institutions that will issue loans based on loan guarantees from the Loan Fund.

E. Utilization of Financial Tools

The fund will use one or more of the following financial tools to assist businesses:

1. Operating Capital Direct Loans - Interest will be subsidized at a level most attractive to loan recipients (it will be determined following a mapping of existing available funds).
   
2. An extended grace period will be provided until the business is able to reestablish itself and begin loan repayments. Three-year loans will be given a 12-18 month grace period.
   
3. The loan fund will guarantee 70% of collateral for loans allocated by other financial 
    institutions. The remainder will be guaranteed by the loan recipient.
   
4. In the event that a business' volume has grown higher than a level yet to be determined and the business owner agrees to waive the approved grace period, 20% of the loan will then be eligible to become grant funding, but only after 80% of the loan has been repaid.
   
5. Loans will be given for a period of up to five years.

F. Target Population

• Micro-business - 1-5 employees with a monthly volume less than $44,500
  
• Mini-business - up to 15 employees with a monthly volume of $44,500 - $67,000
  
• Small business - up to 30 employees with a monthly volume of up to $111,000
  
• Students majoring in economic fields or professions that lend to business development (e.g. Practical Engineers), are in their final year of study, are capable and wish to develop a business in the North. These loans are meant to be on a relatively small scale.

Estimated cost for implementation:  $81,000,000

Photo Credit: Naftali Hilger

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