New York – Interest-Free Loans [Gemach] Steeped in Jewish tradition

New York – In tough economic times, a centuries-old financial lifeline might be one of the best-kept secrets in the Jewish community.

It is a secret whose roots go back to the Torah, where it is called an act of “loving kindness.”

When rent is due or tuition is short, there are loans available for thousands of dollars — interest free.

The programs are part of a tradition in the Jewish community of offering loans without interest to people in need. The money has helped families adopt babies, a woman buy a pacemaker, and immigrants start new lives.

“I was going to Israel, and I just needed some extra money,” said Yaron Gola, of northeast Philadelphia. “It was a tremendous blessing. It makes you feel a part of a community.”

About 50 groups in the United States and abroad lend millions in interest-free loans each year, said Mark Meltzer, past president and cofounder of the International Association of Hebrew Free Loans.

It is viewed as a mitzvah, a good deed, said Rabbi Zalman Lipsker, director of the Lubavitcher fund. In fact, G’Milus Chesed translates to “deed of loving kindness” in Hebrew.

Among the international groups, some limit the loans to members of the Jewish community; others are nonsectarian.

The underlying principle goes back to biblical instruction, said Rabbi Aaron Landes, founding rabbi of the Hebrew Free Loan Society of Greater Philadelphia and rabbi emeritus of Beth Sholom
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Congregation, the society’s headquarters.

Exodus 22:25 says, “If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest.” Similar instructions are in Deuteronomy and Leviticus.

“When immigrants came over from Eastern Europe between 1880 and 1914, they brought these associations with them,” said Shelly Tenenbaum, author of “A Credit to Their Community: Jewish Loan Societies in the United States.”

Other ethnic and religious groups have their own loan programs. In fact, some mosques in Philadelphia offer interest-free loans to their members.

Interest is prohibited in Islamic law and references to the law appear in the Quran and in statements of the Prophet Muhammad, said Masood Ghaznavi, professor emeritus at Rosemont College.

Among the Hebrew loan societies, organization assets range from $100,000 to more than $20 million. Groups vary with respect to professional staffing, business partnerships, and annual lending, Meltzer said.

The first Jewish immigrants to the United States “got $25 to get their pushcart,” said Tamar Granor, who with her husband, Marshall, runs the Hebrew Free Loan Society of Greater Philadelphia.

A bond of mutual trust linked the society, the borrower, and his or her cosigner. Each borrower usually must have at least one.

“It’s one thing to default on an impersonal institution,” Tenenbaum said. “It’s another to default on someone you’re close to.”