Financing SMEs and Entrepreneurs 2020

22. Israel

Key facts on SME financing

Small and medium enterprises (SMEs) constitute the overwhelming majority of companies in Israel. As of 2017, there were 559 567 businesses in Israel and 99.5% of them were SMEs which employed up to 100 workers each.

SME and entrepreneurship policies in Israel are primarily designed by the Ministry of Economy and Industry and implemented by the Israel Innovation Authority (IIA) and the Small and Medium Business Agency (SMBA). While the IIA (formerly known as the Chief Science Office) is focusing on leading technology-based start-ups and SMEs, the SMBA is catering to all SMEs in Israel’s main economic sectors through business management training and coaching, subsidised access to finance (for example, through the national loans guarantee programme) and provision of business development centres (MAOF centres).

A central credit database for household and SME was launched in April 2019. The database is expected to improve competition and data accessibility in the Israeli credit market. In January 2017, a law that separates credit card companies and banks was passed as part of a series of moves to enhance competition in the banking industry, and lower financing costs for SMEs. In February 2019 Bank Leumi completed the sale of Leumi Card (the bank's credit card company) to Warburg-Pincus, an American private equity firm. In April 2019 Bank Hapoalim issued 65% of Isracard (the bank's credit card company) in an IPO, after failing to find a buyer. The bank has to sell the rest of its holdings not later than January 2021.

In 2017, the Knesset (Israel’s legislature) passed the Ethics of Payments to Suppliers Law (known in the EU as Late Payments Directive). This law determines the maximum period within which payments can be made to suppliers for the sale of goods, provision of services or performance of work. The purpose of the law is to reduce the payment period for the business sector, thereby diminishing the need for working capital credit among SMEs, and to increase transparency in payments.

Table 22.1. Scoreboard for Israel

Indicator	Unit	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Debt
Outstanding business loans, SMEs	ILS billion	169.3	171.2	161.6	173.8	177.7	187.0	186.7	211.9	244.6	259.6	266.1	281.8
Outstanding business loans, total	ILS billion	413.9	460.9	425.2	438.9	458.6	450.4	445.7	447.9	415.6	435.5	444.4	476.9
Share of SME outstanding loans	% of total outstanding business loans	40.9	37.14	38.01	39.6	38.75	41.52	41.89	47.31	58.86	59.61	59.88	59.09
Government loan guarantees, SMEs	ILS million	27	17	121	164	116	116	215	232	257	184	144	144
Government guaranteed loans, SMEs	ILS million	170	109	757	1 028	890	1 057	1 951	2 112	2 340	1 838	1 600	1 604
Non-performing loans, total	% of all business loans	..	..	..	..	..	..	..	..	2.77	2.18	1.57	1.25
Non-performing loans, SMEs	% of all SME loans	..	..	..	..	..	..	..	..	2.13	1.77	1.5	1.31
Interest rate, SMEs	%	..	..	..	..	..	..	..	..	3.96	3.84	4.02	4.06
Interest rate, large firms	%	..	..	..	..	..	..	..	..	2.95	2.89	3.05	2.98
Interest rate spread	% points	..	..	..	..	..	..	..	..	1.02	0.95	0.97	1.08
Non-bank finance
Venture and growth capital	USD billion	1.76	2.08	1.12	1.22	2.08	1.88	2.95	3.77	4.75	5.10	5.52	6.47
Venture and growth capital (growth rate)	%, year-on-year growth rate	..	18.2	-46.2	8.9	70.5	-9.6	57.3	27.6	26.1	7.2	8.3	17.3
Other indicators
Payment delays, B2B	Number of days	..	..	..	..	..	..	..	..	..	57.2	53	28
Bankruptcies, SMEs	Number	..	..	2 061	2 834	3 737	5 000	5 610	5 322	5 175	7 900	..	..
Bankruptcies, SMEs (growth rate)	%, year-on-year growth rate	..	..	..	37.51	31.86	33.8	12.2	-5.13	-2.76	52.66	..	..

Source: See Table 22.12.

SMEs in the national economy

As of 2017, there were 559 240 businesses in Israel (see Table 22.2) and 99.5% of them were SMEs with up to 100 employees each. Independent businesses without employees accounted for 51.3% of all businesses. Micro-enterprises (1-4 employees) accounted for 33.4% of all businesses, and 11.3% of total employment (11.7% and 18.6% respectively for Small businesses (5-19 employees), and 3.1% and 21.6% for Medium businesses (20-99 employees). Only 0.5% of Israeli employer companies had more than 100 workers.

Table 22.2. Distribution of firms in Israel, 2017

By firm size

Sector	Number of businesses	% of business	Number of employees	% of employees
Self-employed	286 805	51.3	286 805	9.2
Micro businesses (1-4 employees)	186 550	33.4	349 764	11.3
Small businesses (5-19 employees)	65 544	11.7	578 157	18.6
Medium businesses (20-99 employees)	17 309	3.1	670 642	21.6
Large businesses (='100' employees)	3 032	0.5	1 216 162	39.2
Total	559 240	100	3 101 529	100

Source: SMBA, SME annual state, 2019 (forthcoming).

SME lending

Bank credit is the main funding mechanism for SMEs, and over 80% of SME funding originates from banks. The remaining 20% come from suppliers, institutes, funds, private credit companies, angel investors and others. More than 95% of bank credit to SMEs in Israel is provided by its five major banking groups. The Central Bank of Israel regulates banks to sort credit data according to business types. However, until 2016, each bank had its own unique definitions regarding business types and sizes. This situation was solved in 2016, as the Central Bank of Israel defined a set of unified business sizes.

According to the Central Bank of Israel, institutional lenders provide credit mostly to big companies (through corporate bonds and loans) and SMEs have little to no access to this market. In addition, the securitization market in Israel is undeveloped, so institutional lenders seldom purchase credit portfolios from the banks, that have the operating abilities to provide credit to SMEs. Securitization can free up sources for banks to expand their credit for SMEs.1

Banks

In 2018, Israeli banks provided ILS 281.8 billion in credit to SMEs, an increase of 5.9% compared to 2017 (ILS 266.1 billion). The provision of bank credit to SMEs exceeded that provided to large firms for both 2017 and 2018 (with total outstanding credit estimated at ILS 444 billion and ILS 477 billion respectively). In total, from 2007 to 2018, nominal bank credit to the SMEs has increased by 66%. In 2009, the Israeli banks were required to enlarge their capital target and they have reached their goal in 2017. This process limited their ability to provide credit in those years. At the same time, the local banks had to lower their exposure to single debtors and debtor groups, therefore, the credit average to big debtors in the big five banks decreased from 17% in 2008 to 11% in 2017. The data regarding 2016 and 2017 had slightly changed in the 2018 bank reports.

Table 22.3. Outstanding business loans in Israel

In ILS billion

Indicator Unit	2016	2017	2018
Outstanding business loans, SMEs (stock)	259.6	266.1	281.8
Outstanding business loans, total (stock)	435.5	444.4	476.9

Source: Financial statement of Israeli banks.

Credit conditions

Interest rate data is not officially published but is rather extracted and calculated from the financial statements of the main banking groups in the country, which are required to publish a breakdown of credit distributed according to specific business group sizes. In these statements there is no reference to the average duration or the guarantees of the credit that was given.

The estimated interest rate for small, medium and large enterprises was obtained by dividing the interest income received from businesses2 by the average credit extended to those businesses’ sector. From 2017 to 2018, interest rates for SMEs increased, and particularly for medium-sized firms. The average interest rate for small firms did not change in 2018, and remained the highest among all firms, after the increase between 2016 and 2017 (4.11% to 4.37%). Between 2017 and 2018, interest rates for medium firms slightly rose from 3.16% to 3.3%. The average interest rate for SMEs in total increased by 4 basis points to 4.06% while the interest rates to large firms diminished to 2.98% (after rising to 3.05% in 2017). Consequently, the interest rate spread widened by 11 basis points during this period and now equals 108 basis points. The data regarding 2016 and 2017 slightly changed in the 2018 bank reports.

Table 22.4. Interest rates in Israel

As a percentage

Interest rate	2016	2017	2018
Small firms (Up to 50 million ILS)	4.11	4.37	4.37
Medium firms (50 to 250 million ILS)	3.16	3.16	3.30
Total SMEs	3.84	4.02	4.06
Large firms (Over 250 million ILS)	2.89	3.05	2.98
Spread	0.95	0.97	1.08

Source: Financial statement of Israeli banks.

Handling fees in Israel are charges for handling fees on credit and collateral and apply to loans that are not housing-related. Each major bank has an upper limit on the fees chargeable (see Table 22.5. Until 2012, loan fees applied to loans above ILS 50 000. Since 2013, the base loan amount has been increased to ILS 100 000, although loan fees charged on operations above that amount have remained largely unchanged. Although there are differences among the fees charged by each bank, in the last five years they have remained stable. All Israeli banks exempt business loans below ILS 100 000 from fees. The figures in the Table 22.5 and 22.6 below are the maximum fees each bank can charge. In principle, however, fees are negotiated on a case-by-case basis.

Table 22.5. Handling fees for SME loans in Israel

As a percentage of total loan amount

Bank	2016	2017	2018
Bank Leumi	1.5%	1.5%	1.5%
	Max fee ILS 10 000	Max fee ILS 10 000	Max fee ILS 10 000
Bank Hapoalim	1%	1%	1%
	Max fee ILS 15 000	Max fee ILS 15 000	Max fee ILS 15 000
Bank Mizrahi	1.25%	1.25%	1.25%
	Max fee ILS 10 000	Max fee ILS 10 000	Max fee ILS 10 000
Bank Discount	2.5%	2.5%	2.5%
	Max fee ILS 30 000	Max fee ILS 30 000	Max fee ILS 30 000
First International Bank	1.7%	1.7%	1.7%
	Max fee ILS 10 000	Max fee ILS 10 000	Max fee ILS 10 000

Source: Fee list published by the five big banks in Israel.

Apart from those charged by Bank Mizrahi, credit allocation fees for SMEs were the lowest for all banks in 2018 since 2008 and remained the same for the Sixth year in a row, thus providing a stable credit environment for SMEs.

Table 22.6. Credit allocation fees for SME loans in Israel

As a percentage

Bank	2016	2017	2018
Bank Leumi	1.81	1.81	1.80
Bank Hapoalim	1.75	1.75	1.75
Bank Mizrahi	2.45	2.45	2.45
Bank Discount	2.16	2.16	2.16
First International Bank	2.10	2.10	2.10

Source: Fee list published by the five big banks in Israel

Alternative sources of SME financing

Venture capital

In 2018, total venture capital investment in Israel hit an all-time annual high of USD 6.48 billion, a 17 % increase over the USD 5.52 billion raised in 2017. The total capital raised by Israeli high-tech companies has grown since 2013. VC funds captured the largest investment share (34%) of total capital raised in 2018, reflecting a decrease compared to their historical share. Investment companies more than doubled the capital inflow compared with 2017. The share of Corporate VC capital investments has gradually grown over the years, reaching 9% of total capital invested in 2018, same as in 2017. Israeli VC funds slowed their activity during 2018, both in new and follow-on investments. For the first time since 2013, the number of follow-on investments has exceeded the number of first investments for Israeli VCs. A slowdown was also noted in the relatively low share of Israeli VC funds compared to overall amounts—just 12%, the lowest in 6 years.

Table 22.7. Total venture capital investments in Israel

Indicator	Unit	2013	2014	2015	2016	2017	2018
Total venture capital investment	USD million	2 954	3 768	4 753	5097	5 518	6 474
Total VC investment, growth rate	%	57.3	27.6	26.1	7.2	8.3	17.3
Share of Israel VC investments out of total investment	%	24.0	16.0	15.0	13.0	16.0	12.0

Source: Information courtesy of IVC Research Center, http://www.ivc-online.com/Research-Center/IVC-Publications/IVC-Surveys/High-Tech-Capital-Raising.

The high-tech industry receives almost all VC equity investments in Israel. In 2018, Israeli software company capital raising has grown more than 50% from 2015 and six-times from 2013. Life sciences capital raising has kept stable levels, USD 1.2 billion in 126 deals, with medical devices companies attracting approximately 50% of the sector’s total capital. Deals over USD 20 million captured more than 70% of the total amount in this sector. Fintech companies attracted the highest amounts in 2018 compare to 2013-2017 due to mega-deals: eToro (USD 100 million), Next Insurance (USD 83 million), and Hippo Insurance (USD 95 million). 2018 was the strongest year for Israeli cyber security companies, which raised USD 1.08 billion in 89 deals, higher than 2017. Companies with AI characteristics continue the uptrend in valuation reaching USD 1.89 billion in 2018. As a result, other industries have to seek alternative opportunities for financing.

Figure 22.1. High-tech capital raising in Israel

Source: Summary of Israeli High-Tech Company Capital Raising 2018, IVC Research Center and ZAG S&W.

Statlink

Despite of the growth in volume, the number of VC deals closed in the high-tech industry has diminished during the last few years. In 2018, the number of VC deals (623 in total) declined by 5.6%. The data regarding previous years slightly changed in the 2018 IVC survey.

The number of deals below USD 5 million continued to shrink in 2018, while deals above USD 20 million kept growing. The amounts of larger deals almost quadrupled from 2013 to 2018, seizing 63% of the total amount in 2018. Meanwhile, the number of smaller deals (below $5m) has declined by 23% since 2015.

Figure 22.2. Share of high-tech companies in Israel

By deal size, as a percentage

Source: Summary of Israeli High-Tech Company Capital Raising 2018, IVC Research Center and ZAG S&W.

Statlink

Other instruments

Leasing and factoring

The leasing market in Israel pertains mainly to the automobile sector. In 2018, 7.6% of all cars in Israel (7.4% in 2017) and 24.4% of new cars were owned by leasing companies3 (23.1% in 2017). There are six public companies that offer factoring, cheque discounting and loan services for SMEs. The total credit allocated by non-banking organizations for SMEs is estimated at ILS 6 billion.4

Microfinance and innovative finance

In recent years, a new market for peer-to-peer (P2P) loans has been operating and growing over web platforms that connect debtors and lenders without brokers and other intermediaries. Under P2P lending, borrowers can access better terms and lenders can decrease risk by diversifying their portfolio risk among several project carriers and micro-enterprises. In July 2017, the government approved a law to regulate the actions of Internet companies in this field.

According to the Israeli media, at present, there are only a few P2P platforms in Israel, only four of them provide business credit (B2B, Bizland, Creditplace and Eloan).5

Additionally, there are several loan funds offering zero interest, such as loans in the SAWA programme (the joint Microfinance programme of KORET Israel Economic Development Funds (KIEDF) and the Ministry of Economy and Industry) and the Israel Free Loan Association (IFLA) fund.

Others (e.g. grant schemes, honour loans)

The government has developed programmes to improve employment among targeted populations, notably in the peripheries, by assisting SMEs in the hiring and training of new employees. Additional programmes, also sponsored by the government, encourage SMEs to invest in new equipment to increase productivity.

Crowdfunding

In March 2017, the Israel Securities Authority completed the enactment of mass financing regulations for research and development companies and SMEs. In November 2017, the Finance Committee of the Knesset approved the Securities Authority's amendment to mass financing regulations. It provides corporations with an additional channel to raise debt or equity (equity is limited to ILS 4-6 million per company per year) through mass financing platforms, without having to reveal their identities. In April 2019, a Foodtech company raised USD 1 million, the highest amount for a private company in Israel raised from a crowdfunding platform. According to the company, the choice of crowdfunding over traditional funding was made because it is a faster and easier channel, especially for a company with existing products.

There are five platforms for crowdfunding in Israel, the two main platforms (Pipelbiz and Exitvalley) raised approximately ILS 120 million since they were established. Their share is estimated to be about 90% of the crowdfunding local market.6

Other Indicators

Non-performing loans

In 2018, the downward trend of non-performing loans7 as a share of total credit volume continued for medium and large companies, while slightly increasing for small companies. The SME non-performing loans ratio was 1.31% in 2018, compared to 1.5% in 2017, while this ratio reached 1.18% for large companies, compared to 1.69% in 2017.

Table 22.8. Non-performing loans in SMEs vs. large businesses in Israel

As a percentage

Weighted arithmetic mean of non-performing loans	2016	2017	2018
Small businesses (Up to ILS 50 million)	1.79	1.52	1.54
Medium businesses (ILS 50 to 250 million)	1.72	1.42	0.73
Large businesses (Over ILS 250 million)	2.78	1.69	1.18
All businesses	2.18	1.57	1.25

Source: Financial statements of Israeli banks.

Payment delays, B2B

The SMBA surveys businesses to obtain information on payment delay experiences. In 2017, 56% of the businesses that participated in the survey reported a delay in payments received from clients. They reported on average a 53 day delay, a slight improvement compared to the 57.2 days reported in 2016. The 2018 survey has not been published yet.

Figure 22.3. Self-reported payment delays from SME customers in Israel

By firm size, as a percentage

Source: Business survey by the SMBA, 2017.

Statlink

Bankruptcies

From 2009 to 2011, “bankruptcy orders” increased more than 30% year-over-year before reaching a seven-year high of 5 610 in 2013. Between 2013 and 2015, the number of orders filed decreased, reaching 5 175 in 2015. However, in 2016, “bankruptcy orders” increased by 53%, reaching a record high of 7 900. In 2017, the figure for these orders was not published in the Official Receiver's report. “Receiving orders” are a demand from the court to officially close a bankrupt company. They increased by 390% between 2009 and 2017, reaching 19 906.8 Data for dissolution requests is available from 2013 and demonstrates that they have remained fairly stable (see Table 22.9).

Table 22.9. Bankruptcies in Israel

Total number, all businesses

Indicator	2009	2010	2011	2012	2013	2014	2015	2016	2017
Receiving orders	4 058	6 216	8 145	10 342	11 256	13 228	14 756	16 138	19 906
Bankruptcy orders	2 061	2 834	3 737	5 000	5 610	5 322	5 175	7 900	..
Dissolution requests	..	..	..	..	740	795	879	887	914
Dissolution orders	565	579	555	584	495	520	551	602	607

Source: Ministry of Justice, the Official Receiver Report,

https://www.gov.il/BlobFolder/reports/summary_report_2017/he/SummaryReport2017.pdf

Government policy response

Government loan guarantees for SMEs

Since 2003, the government has begun issuing loan guarantees to help established and expanding SMEs across all sectors of the economy. Funding from private banks and institutional organs are partly guaranteed by the governmental Loan Guarantee Fund. Under this fund, the Accountant General at the Ministry of Finance and the SMBA operate two coordination companies that assess the business plans for credit applications, conduct due diligence with SMEs and estimate the risk of the loans. According to recommendations from this risk estimation, the fund sets up a dialogue with the bank to determine the loan’s applicable interest rate, define specific loan conditions and approve the loan. The scheme is open to SMEs with annual turnovers of less than ILS 100 million.

The scheme provides a maximum of ILS 500 000 for new businesses or those with annual turnover of less than ILS 6.25 million. For those with an annual turnover between ILS 6.25 million and ILS 100 million, loans of up to 8% of turnover, for exporters up to12% of turnover can be provided. For industrial businesses, loan provision extends up to 15% of turnover. The loan period is 5 years, or up to 12 years for industrial capital investments. A grace period of six months can be granted for principal payments. The interest rate is determined by the banks for each loan, takin into consideration the government guarantee and the risk of the loan. In addition, the business owner is required to provide his/her personal guarantee. The total loan portfolio is limited to the leveraging ratio agreed upon with each bank.

The programme requires a ratio no lower than 70:30 of outstanding loans for small businesses to outstanding loans for medium businesses. Up to ILS 4 billion in government guarantees has been issued since the new tender for the fund in 2016. These guarantees have benefitted 50 000 businesses from previous funds and an additional 9 500 as a result of the new fund launched in March 2016.

The SME fund is based on loans executed by banks selected in a tender. The banks leverage the guarantee assigned to them by the government (the portfolio) by up to 11 times. As of March 2016, a new state-guaranteed small and medium-sized business fund was established, replacing the previous fund. Unlike in previous funds, this fund’s source of finance includes institutional funding (for example, from insurance companies and pension funds) in addition to bank funding, in order to expand available credit for businesses. In addition, various improvements have been introduced in favour of businesses, including an increase of the maximum credit limit for exporters and the opening of a designated loan option for industrial capital investments in which long-term 12-year loans can be issued.

Table 22.10. Details of government-guaranteed funds for SMEs in Israel

Fund	Indicator	2012-15	2016-2018
Small and medium businesses' fund	Maximum annual turnover	ILS 100 million	ILS 100 million
	Maximum loan amount	ILS 500 000 or 8% of the annual turnover, whichever is higher	ILS 500 000 or 8% of the annual turnover, whichever is higher. In the industrial sector up to 15% of annual income
	Government loan individual guarantees	70%-85% depends on the type of the business	70-85% depends on the type of the business

In 2018, the amount of government-guaranteed loans reached ILS 1 600 million, a decrease of almost 13% from 2016 (ILS 1 838 million) but this was in parallel with increase of the overall credit for SME that rose in 15 billion NIS.

Government loan individual guarantees cover 70% of loan amounts for established businesses, and 85% of loan amounts for new businesses. The government loan individual guarantee refers to each loan separately. Portfolios of approximately 16% of SME bank loans were guaranteed by the government, in 2011. In 2012, on average 10% of SME bank loans were guaranteed as a portfolio for each of the main banks. As of April 2019, the government guarantees approximately 9% of the banks' loans portfolios of the fund.9

Table 22.11. Government loan guarantees in Israel

In ILS million

Indicator	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
Government guaranteed loans, SMEs	170	109	757	1 028	890	1 057	1 951	2 112	2 340	1 838	1 600	1 604
Government guaranteed for the portfolio of SME loans in the banks*	27	17	121	164	116	116	215	232	257	184	144	144

Note: *estimate.

Source: Accountant general, Israeli Ministry of Finance.

SAWA Direct Non-Bank Micro Loan Fund

This programme was launched in 2006 by KIEDF, who has been collaborating with the SMBA since 2011. SAWA loans are designated for micro businesses owned by Arabic females. Most of the loans in SAWA are group-guaranteed loans, wherein a group of five Arab women who know one another provide each other with a mutual guarantee and receive micro-loans and business training from the fund.

An additional loan with a group guarantee can be submitted after the previous outstanding loans of all group members are completely cleared. Women who receive a few successful rounds of group loans in this manner may then apply for a personal loan. SMBA provides the resources for the fund alongside KIEDF, an Israeli NGO that provides loans, guarantees, training and business advice for small businesses.

Personal loans are about 14% of the number of loans in the fund and account for about 29% of total loan volume. These loans are offered to new businesses in amounts up to ILS 10 000, with an optional loan of up to ILS 30 000 for entrepreneurs who already have a business activity. One guarantee is required and the payback period should be no longer than three years. There is no grace period, and the interest rate on personal loans is limited to 9% per year. All participants in the group guarantee loans are charged a ILS 500 fee each year for participating in the programme.

Over the 2011-18 period, SAWA distributed 8 261 loans totalling more than ILS 65 million, out of which 1458 loans totalling NIS 11.6 million in 2018. Only 1.6% of all loans defaulted, and the programme supported the creation and development of 4 600 micro-enterprises.10

Growth capital private equity funds

This fund was launched in 2016 to enable long term funding and investment in business solutions. It aims to bridge the gap between businesses’ needs and financing available in the market. The source of funding are private equity funds like Peninsula and Cogito Capital funds along with the government. Delivery agents are private equity funds offering government-protected equity investments.

This programme is open to businesses with annual turnovers between ILS 10 million and ILS 130 million. At least ILS 3 million is offered per business (mainly as mezzanine loans), except in cases of continued investment. The funds raise around ILS 300‑450 million from private investors and institutes. Private investors are limited to 40% of the fund’s investment while the government invests up to 25%. The investment period is up to five years from the first closing date, or when the fund invests 90% of its commitment, whichever occurs first.

Downside protection is another feature of the fund wherein the government absorbs a portion of case losses depending on the extent of the losses. According to the Ministry of Economy, as of December 2018 the Peninsula and Cotigo Capital funds have invested approximately ILS 350 million in 25 companies.11

Figure 22.4. Trends in SME and entrepreneurship finance in Israel

Source: See Table 22.12.

Statlink

Table 22.12. Definitions and sources of indicators for Israel’s scoreboard

Indicator	Definition	Source
Debt
Outstanding business loans, SMEs	Business loan amount outstanding for SMEs	Financial statement of Israeli banks + Bank of Israel
Outstanding business loans, total	Total business loan amount outstanding for all firms	Financial statement of Israeli banks
Government loan guarantees, SMEs	Government guaranteed for the portfolio of SMEs loans in the banks (estimate)	Accountant General, Israeli ministry of finance
Government guaranteed loans, SMEs	Bank loan given with a governmental guarantee	Accountant General, Israeli ministry of finance
Non-performing loans, total	Percentage rate for damaged debts in all firms	Financial statement of Israeli banks
Non-performing loans, SMEs	Percentage rate for damaged debts in SME	Financial statement of Israeli banks
Interest rate, SMEs	Margin credit activity, received by SMEs, divided by the credit given to that sector	Financial statement of Israeli banks + Bank of Israel
Interest rate, all firms	Margin credit activity, received by all Businesses, divided by the credit given to all Businesses	Financial statement of Israeli banks + Bank of Israel
Non-bank finance
Venture and growth capital	Venture capital investments in Israeli SMEs	Israel Venture Capital (IVC) 2017 Report
Other
Payment delays, B2B	Average number of delay days from agreed payment day, B2B, only for businesses that reported about delay days.	Businesses survey by the SMBA
Bankruptcies, SMEs	Number of bankruptcies orders issued by the Official Receiver	Ministry of Justice, the Official Receiver report for 2016

Table 22.13. Definition of the business types in commercial banks in Israel, post-2016

Category	Commercial Banks
Small Business	Up to 50 million ILS
Medium Business	50 to 250 million ILS
Large Business	Over 250 million ILS

Source: Financial statements of the biggest five banks in Israel.

Table 22.14. Definition of the business types in the various bank groups in Israel, until 2016

Category	Criteria	Bank Leumi	Bank Hapoalim	Bank Mizrahi	Bank Discount	First International Bank
Small Business	Credit	Up to 10 million ILS	Up to 6 million ILS	Up to 6 million ILS	Up to 5 million ILS	Up to 5 million ILS
	Annual Turnover	Up to 20 million ILS	Up to 30 million ILS	Up to 30 million ILS	Up to 15 million ILS	Up to 25 million ILS
Medium Business ("Trade sector")	Credit	10 to 120 million ILS	6 to 100 million ILS	6 to 25 million ILS	5 to 50 million ILS	Up to 40 million ILS
	Annual Turnover	20 to 400 million ILS	30 to 400 million ILS	30 to 120 million ILS	15 to 150 million ILS	25 to 200 million ILS
Large Large Business ("Business sector")	Credit	Over 120 million ILS	Over 100 million ILS	Over 25 million ILS	Over 50 million ILS	Over 40 million ILS
	Annual Turnover	Over 400 million ILS	Over 400 million ILS	Over 120 million ILS	Over 150 million ILS	Over 200 million ILS

Source: Financial statements of the biggest five banks in Israel.

References

Financial statement of Israeli banks:

http://www.boi.org.il/he/BankingSupervision/FinancialReports/Pages/Default.aspx

Financial statement of the credit cards companies and financial statement of Bank Leumi, Bank Hapoalim and Bank Discount:

http://www.boi.org.il/he/BankingSupervision/FinancialReports/Pages/Default.aspx

Accountant general, Israeli ministry of finance:

https://mof.gov.il/AG

http://mof.gov.il/AG/FinancingAndCredit/StateGuarantees/Documents/BusinessLoansFound.pdf

Credit allocation fees in Israel available under:

https://www.leumi.co.il/home01/commissions_and_fees/9046/

https://www.bankhapoalim.co.il/wps/portal/PoalimPrivate/taarifone

https://www.mizrahi-tefahot.co.il/he/Bank/Pages/interest-list.aspx

https://www.discountbank.co.il/DB/private/general-information/price-list-and-hiking-fees

https://online.fibi.co.il/wps/portal/FibiMenu/Marketing/AnNote/AnInformation/AnCommissionsRate

Venture capital investments in Israel:

Israel Venture Capital Research Centre:

http://www.ivc-online.com/Research-Center/IVC-Publications/IVC-Surveys/High-Tech-Capital-Raising

Summary of Israeli High-Tech Company Capital Raising 2017, IVC Research Center and ZAG S&W

Bankruptcies DATA:

Ministry of Justice, the Official Receiver report

https://www.gov.il/BlobFolder/reports/summary_report_2017/he/SummaryReport2017.pdf

SMEs in the national economy:

Business survey by SMBA, 2017

Outstanding Payment delays, B2B:

SMBA, SME annual state, 2017

Notes

← 1.  Bank of Israel Annual Report 2018, chapter 4

← 2.  Interest income from external sources

← 3.  Israel Central Bureau of Statistics Media Releases from 19-5-2019: Motor Vehicles In Israel In 2018

https://www.cbs.gov.il/en/mediarelease/Pages/2019/Motor-Vehicles-in-Israel-in-2018.aspx

← 4.  Based on Peninsula LTD financial report 2018

← 5.  https://www.protocol.co.il/p2p-loan/

← 6.  Web sites of the two main crowdfunding platforms

← 7.  Non-performing loans are damaged debts which had been defined by the Bank of Israel as debts expected not being able to collect by the bank

← 8.  One reason for this increase is a tendency of reduction in bankruptcy procedures and simplicity of the processes in order to give second chance for entrepreneurs. The reform in bankruptcy procedures has started in 01.09.2013 and includes simplification of procedures and shorten the time of bunkrupcs.

← 9.  According to data received from BDSK, one of the coordination units

← 10.  According to data received from the Ministry of Economy and Industry

← 11.  According to data received from the Ministry of Economy and Industry