Government measures in key jurisdictions 3rd edition final - Flipbook - Page 68
Simon Jaffa | sjaffa@barlaw.co.il | +3 640 0600
Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
The Israeli government has declared several support initiatives in an aggregate amount exceeding NIS
100 billion. These support initiatives include government-backed loans, governmental grants to
businesses implementing social distancing and innovative communication technologies, deferral of tax
payments, and cancellation of municipal and other taxes.
Specifically, the government has allocated up to NIS 22 billion to support loans for businesses by
providing funding entities with a guarantee for 60% of any loan amount provided. These monies are
provided through the government’s already existing fund for supporting small-medium businesses,
operated by the Ministry of Finance, and are not time-limited.
The funding scheme is divided into two main routes (with a slight overlap between the two). The first
route is designated for small-medium entities (SMEs) whose turnover did not exceed NIS 400 million in
the previous year. The second route is designated for large entities (LEs) whose turnover exceeded NIS
200 million in the previous year. Of the NIS 22 billion allocated for support, NIS 4 billion is allocated to
high-risk SMEs, who can demonstrate that the COVID-19 pandemic caused a reduction of more than 50%
in their turnover during the affected period.
Under the SME route, each SME may request a loan of up to 16% of its previous year’s turnover, limited
to up to NIS 20 million. Under the LE route, each LE may request a loan of up to 8% of its previous year’s
turnover, limited to up to NIS 100 million. The loans are provided with attractive interest for a period of
up to five years, and each entity is allowed a 12-month grace period on loan repayment. The government
further undertook to finance for SMEs any interest due on the loan during the first 12 months.
As a precondition to receipt of the loans, all borrowing entities are required to demonstrate that they
experienced cash-flow difficulties due to the COVID-19 pandemic, as well as to provide the financing
entities with a deposit equal to 5% of the loan. Furthermore, for SMEs requesting funding, any holder of
5% or more of the capital of such SME is required to provide a personal guarantee for the entire loan
amount. As for LEs, all their shareholders are required to provide a personal guarantee equal to twice
their holding percentage.
Employment
What
financial support is
the government
providing to
businesses and to
individuals on
employment
issues?
68
Encouragement Grant Law, 2020 was passed, enabling employers who recruited or returned to work a
"qualifying employee" to be eligible for a grant. A grant of NIS 3,500 will be paid (in monthly
installments of NIS 875) if the "qualifying employee" returned to work or was recruited before June 1,
2020. A grant of NIS 7,500 will be paid (in monthly installments of NIS 1,875) if the "qualifying
employee" returned to work or was recruited after June 1, 2020.
A "qualifying employee" is an Israeli resident whose monthly salary is at least NIS 3,300 and to whom
one of the following applies:
•
•
he/she is between 18 years old and 67 years old,
one of the following applies:
- he/she was discharged to unpaid leave between March 1, 2020, and April 30, 2020, or was on
parental leave during the aforementioned period, or
- he/she was eligible for an adjustment grant or income security benefit or unemployment benefit
for May 2020.
Government measures in key jurisdictions