Government measures in key jurisdictions 4th edition - Flipbook - Page 67
Israel
Simon Jaffa | sjaffa@barlaw.co.il | +3 640 0600
Contributor: Barnea
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. Of the NIS 18 billion for
regular SME’s and LE’s, 97% (17.5 billion) had already been allocated by the end of August, while
only 16% (600 million) of the 4 billion for high risk SME’s was allocated.
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.
The government has also increased the funding of several government aided programs and
agencies, such as the Israeli Innovation Authority, aimed at the advancement of advanced
technologies to help stimulate the hi-tech industry, and to address the shortage of skilled
manpower therein.
Employment
What
financial support is
the government
providing to
businesses and to
individuals on
employment
issues?
67
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