Borrowing money can be expensive — especially when your pockets aren’t deep to begin with.
Whether you’re trying to consolidate your debt or simply cover rent, borrowing solutions like personal loans and credit card advances all come with interest. Sometimes that interest is incredibly high.
When you find yourself in this situation, you may want to find out if your city has a Hebrew or Jewish free loan association. You don’t necessarily have to be Jewish to qualify for a zero-interest loan from one of these organizations.
A Brief History of Hebrew Free Loan Associations
Hebrew free loan associations are a tradition carried over from Eastern Europe by Jewish immigrants. In America, they date back as far as 1887, with many being founded in the early part of the 20th century.
These organizations were built around the idea that lending to those in need is equally as important as charitable giving — if not more so in some instances. Supporters of these organizations point to Leviticus 25:37, saying the Hebrew scripture instructs that lending of this kind should be done without charging interest.
In this spirit, free loan associations issue zero-interest loans to community members.
How These Zero-Interest Loans Work
Free loan associations have a set amount of money to lend. When someone applies and is approved for a loan, they pay that money back with 0% interest.
The money then goes back into the lending fund, allowing the loan association to issue another no-interest loan to a new borrower. In this way, the dollars are “recycled” to help multiple members of the community over long periods of time.
To increase the number of people they can loan to, free loan associations rely on donations. These donations are tax-deductible, and can be made to any individual free loan association across the country.
Types of Zero-Percent Interest Loans Offered by HFLAs
There are a myriad of programs available at Hebrew free loan associations. You can apply for a zero-interest loan for any number of reasons, including:
- Small business loans.
- Home improvement loans.
- Section 8 housing loans.
- Debt consolidation loans.
- Loan to cover medical bills.
- Home healthcare loans.
- Personal loans for veterans.
- Student loans.
- Private school tuition loans.
- Loans for continuing education and job training.
- Loans for adoption and fertility expenses.
- Loans to flee or recover from domestic violence.
- Loans for family emergencies.
- Wedding loans.
- Loans for funerals.
- Loans for other religious events.
- Personal loans during the COVID-19 pandemic.
This list is by no means exhaustive. The types of loans available will vary depending on your local free loan association.
Even if you don’t find a program for your specific needs, you still may want to ask. Many of these organizations will try to accommodate community needs when possible.
Where Can I Find a Hebrew Free Loan Association?
There are dozens of Jewish or Hebrew free loan associations across North America. Some branches serve a singular metro area, while others cover multiple states.
Some lend to all members of the local community regardless of religion, while others lend only to the Jewish community.
Zero-Interest Loans Across the US.
Of the dozens of associations, here are US locations that lend to all members of the local community:
You do not have to be Jewish to apply for a loan at these locations.
Can You Get a Loan from a Hebrew Free Loan Association?
Underwriting standards at Jewish free loan associations vary greatly. Standards like credit scores and income eligibility vary not only from location to location, but also from program to program.
For example, if the Los Angeles branch serves you, you can get a small business loan with a credit score of 580+. But if you’re looking for a Veterans Loan from that branch, you’ll need a credit score of at least 680.
If you don’t meet your free loan association’s underwriting standards, you can get a guarantor or co-signer who does. At some locations, such as Pittsburgh, securing your loan through collateral may be an option if you don’t meet underwriting criteria yourself and cannot find an eligible cosigner.
What Are the Loan Terms Like?
Loan terms will vary depending on your individual circumstance and the type of loan you’re seeking.
Student borrowers who are taking out large sums for school may want to note that the repayment period with a free loan association is often going to be far shorter than the loan terms offered on federal student loans. This means your payments are likely to be larger, even if you’re paying less because you’re not being charged interest.
It’s also important to remember that when you borrow outside of the federal programs, the loan doesn’t qualify for federal forgiveness programs like Public Service Loan Forgiveness.
The max amount you can borrow will vary from program to program. For example, many pandemic-related programs at free loan associations across the country have loan caps. This is to ensure that the limited funding serves as many people as possible. If you need to borrow a large amount, you may have to look for additional sources of funding.
Brynne Conroy is a contributor to The Penny Hoarder.