Israeli small businesses in dire straits due to coronavirus closures

The government says it will spend NIS 3 billion in an effort to save this vital part of the country’s economy, but some ask ‘Will it be enough?’

By Batya Jerenberg, World Israel News

Small companies in Israel are suffering a huge financial blow from the government-mandated shutdown of all non-essential businesses due to fears over the coronavirus contagion. There are concerns that the public aid being offered in exchange may not be enough to save them.

The Ministry of Finance has stated that it will set aside NIS 3 billion to aid employers by delaying most income tax and utility payments until the end of April or mid-May, making available government-backed loans to troubled businesses and giving compensation of up to NIS 7,000 to self-employed hurt by the shutdown.

As the owner of one eatery told Yediot Ahronot on Sunday, closing down for a few weeks is a very hard blow to take.

“It’s crazy what small businesses are going through,” said the  owner of Yigal Baguette. “No one knows what kind of economic crash will occur afterwards. Health is more important than money, but the economic damage of closing for several weeks is enormous.”

According to the Small and Medium Businesses Agency, firms with up to 100 employees make up over 99 percent of the businesses in Israel. They employ over 60 percent of those who work in the business sector and produce just over half of its GDP, serving as the basis of the economy.

The Bank of Israel has responded to the fears of the small business sector by easing certain regulations that will “enable banks and credit card companies to assist households and businesses in getting through this period with as little negative impact as possible,” said Supervisor of Banks Dr. Hedva Ber on Sunday.

Banks have agreed to delay mortgage payments for up to four months and freeze all new measures against those already in arrears. They will also give favorable loans to small- to mid-sized businesses, both as part of the government fund and through independent programs they set up themselves.

Bank of Israel Governor Prof. Amir Yaron said on Sunday that those businesses “are very significant to the economy’s ability to continue growing.”

“If each bank in the system eases its credit policy even slightly, it will help get past any cash flow difficulties that may weigh down on businesses with healthy economic activity,” he said.