Not-for-profit lender The Ogen Group has received what it says is a “landmark” impact investment loan of $1 million from US tech giant Google to provide low-interest loans to small businesses throughout Israel and help them with the economic fallout of the pandemic.
Google’s funds will provide an injection of capital to the organization, helping it hand out added funds to underserved small business owners and help them launch, rebuild, or expand their activities in light of the COVID-19 crisis. Google is the first international corporate impact investor to support Ogen in this way, the nonprofit said in a statement.
The joint announcement on Wednesday follows a commitment the US tech giant made in 2020 to invest $200 million in nonprofits and financial institutions around the world to help provide small businesses with access to capital.
In 2020, Ogen lent almost $50 million to small businesses, low-income households and nonprofits, $20 million of which was directed to small businesses. Ogen intends to lend an additional $30 million to small businesses in 2021, the statement said.
In August, in recognition of Ogen’s growth, impact and responsiveness to the needs of small businesses during the coronavirus crisis, the Finance Ministry provided Ogen with state guarantees on its loans. With that development, Ogen became the first not-for-profit lender, and one of very few non-bank lenders, to have such guarantees. The nod of the State of Israel as a guarantor to its loans was a key factor in Google’s decision to commit its support to Ogen, the statement said.
Google and Ogen have together leveraged the government apparatus “to help small and medium-sized businesses affected since the outbreak of the coronavirus. Cooperation between the third sector and leading companies has the power to help the many businesses in financial distress due to the pandemic,” said Avi Simhon, chairman of the National Economic Council and economic adviser to the Prime Minister, in the statement.
Google’s injection of funds is a “show of trust in Ogen’s ability to spark growth for small businesses in Israel and support the economic recovery through our affordable and accessible loans, providing first-class financial access to underserved Israelis,” said Sagi Balasha, CEO of the Ogen Group. The investment in Ogen “shows how business, non-profit and government stakeholders can come together in 2021 to finance social ventures and develop a true impact economy in Israel.”
Barak Regev, Google Israel country manager, said, “We joined Ogen in order to financially help and support more businesses, while continuing our effort to digitize small business in Israel.” Small businesses are the heart of the economy, he added.
Small businesses, which generate more than 35% of Israel’s GDP, have been severely affected by the lockdown measures, losing 44% of revenue on average, Ogen said.
Despite government efforts to incentivize the banks to support the small business sector, small businesses actually received 0.6% less bank credit in the last three months of 2020 as compared to 2019, according to Finance Ministry data.
In addition to financing small business loans through Ogen, Google is granting an additional $500,000 to support the growth of its ShoppingIL Academy initiative, which helps small businesses embrace online sales and marketing. Keren-Shemesh, part of the Ogen Group, will provide long-term mentoring to the small business owners selected to participate in Google’s ShoppingIL Academy initiative.
Formerly known as the Israel Free Loan Association (IFLA), Ogen was founded in the early 1990s by the late Eliezer Jaffe, an immigrant from the US. The nonprofit provides both interest-free and low-interest loans, as well as financial guidance, to people, small businesses and nonprofits in Israel that are ill-served by the financial sector, which sees them as too small and too risky to get financing.