The Hebrew Free Loan Association of Greater Washington is a 501(c)(3) not-for-profit philanthropic association. We are part of the International Association of Jewish Free Loans, a network of interest-free lending agencies across the world. In addition to organizations in major cities across the United States, Hebrew Free Loans are also found in Israel, Argentina, Australia, and Canada.
Why We Do It
The tradition of interest free giving goes back thousands of years, and has its source in the Bible. Exodus 22:24 states: "if you lend money to My people, to the needy among you, do not act toward them as a creditor: Exact no interest from them." For over 110 years, that is exactly what we have been doing.
On September 9, 1909, a group of 10 men pooled their resources and organized the Hebrew Free Loan Association of Greater Washington with their combined capital of 55 dollars. The founders were Leopold Baumgarten, B. Cohen, Aaron Goldman, Morris Garfinkle, Simon Gordon, Paul Himmelfarb, Charles Rapaport, H. Porton, John Wolfe and Simon Atlas. Their primary aim was to help Jewish people become self-supporting, and also to help sustain those in danger of losing their economic independence. That continues to be our aim today.
A recent history of the Hebrew Free Loan movement (found at myjewishlearning.com) fits our work in the greater Washington region into the national context:
“Hebrew free loan societies… helped fuel Jewish immigrant economic success during the first third of the 20th century. Free loan societies charged no interest on their loans….Before the 1930s, only a handful of banks loaned money to individuals or small businesses, especially those owned by immigrants. By one account, more than 85 percent of all Americans were excluded from access to commercial credit. More than any other immigrant group at the time, American Jews of Eastern European background worked in or owned small businesses — petty retail stores, small workshops, or peddlers’ pushcarts and wagons. Without access to the small loans provided by the free loan societies… many of the businesses founded by and employing immigrant Jews would not have been created.
Minnie Low, founder of the Chicago Women’s Loan Association in 1897 observed, “In the Chicago Ghetto, along the Jefferson Street market, as well as throughout the entire district, there are comparatively few of the peddlers, vendors and keepers of small stands and shops who have not been given a start in life or helped over rugged places by loans from local organizations.”
Historian Shelley Tenenbaum notes that Hebrew loan societies were “based on the biblical and Talmudic concept of providing the Jewish poor with interest-free loans.” Maimonides considered the interest-free loan among the higher forms of tzedakah because it respects the dignity of the borrower, provides him with a means of self-sufficiency, and does not saddle him with large debt. At their peak, more than 500 Jewish free loan societies operated throughout the United States. In 1920 alone, the New York Hebrew Free Loan Society distributed more than one million dollars in loans to Jewish-owned small businesses.
The societies restricted themselves to meeting the capital needs of small business enterprises, rather than other charitable requirements. As a Rhode Island newspaper reported, the Providence Hebrew Free Loan Society provided ‘means whereby the Jew can start in business for himself, or can meet the obligations of his business till it becomes established on a paying basis. This does not mean that a member of the race who is pressed for money for other purposes, because of illness or other emergency, is left without possibility of aid from his own people. There are other [Jewish philanthropic] associations which will help him’….In the 1930s, banks made further inroads into the survival of Jewish free loans. Noting that Jewish credit cooperatives had default rates of less than one percent despite the Depression, commercial banks created personal loan departments to provide individuals and small businesses with larger loans than the free loan societies could risk.
By the late 1940s, personal credit departments were common in banks. With some exceptions, Jews obtained access to this source of credit on the same basis as others. By the 1960s, the surviving Hebrew free loan societies sought new avenues for distributing their funds, such as interest-free loans to Jewish college students….While Jewish-owned small businesses no longer have difficulty obtaining commercial credit, the surviving free loan societies continue to perform the mitzvah for which they were created.” (Source)