Why a Gemach to lend money?
The Torah encourages loans but forbids charging interest when lending money to another Jew:
“When you lend money to My people, to the poor person with you, do not behave toward him as a lender; do not charge him interest.” (Shmos 22:24).”
“You shall not pay him money as interest, nor may you give him more food than you borrowed” (Vayikro 25:37).
The Mishna (Bava Metzia 75b) lists the different people who violate Biblical prohibitions when a loan is given with interest:
“These violate a negative commandment: the one who loans, the one who borrows, the guarantor, the witnesses, and, the Sages say, even the scribe who writes the document.”
We can see from here that the Torah strongly objects to interest-bearing loans even if the one borrowing the money agrees.
This aversion to interest, led to the idea of the Gemach (an abbreviation for חסדים גמילות, gemilus chasodim, “acts of kindness”). It is a free-loan fund which subscribes to both the positive Torah commandment of lending money and the Torah prohibition against charging interest on a loan. Unlike bank loans, gemach loans are interest-free.
The funds that are available to loan have been given by individuals from their charitable money and the Gemach has an obligation not to lose this money by making bad loans.
To ensure repayment of a money loan, gemachs typically ask the borrower to provide one or two guarantors as co-signers on the loan. (In halakha this is known as areivus.) Should the borrower fail to repay on time, the gemach owner can turn to these co-signers and demand repayment, a claim which will be upheld in a Beis Din (Manchester Beis Din for our purposes).
The ZY Gemach is here to avoid people paying interest. The ZY Gemach does not need to know the reason for the loan, as long as the money is not being used for something against the spirit of the Gemach or against Torah law. So as long as the borrower can get a guarantor (ZY Gemach requires only one) there is no reason to pay interest charges (the lowest credit card rate at the time of writing was 13.9%).
The ZY Gemach has only recently started. The rules are not set in stone. But, currently we are prepared to loan up to £1000 for up to two years. As more funds are donated to the Gemach we may be able to loan larger sums.
At all events, if you need a loan and would like to discuss whether the Gemach can help you, please contact Yitzchok Douek, Mark Duman, Colin Rich or Michael Wilks. We will treat your enquiry in strict confidence.
The Trustees of the Gemach are: Rabbi B Cohen, Mr M Duman and Dr M Wilks.
The official contact details are:
ZY GEMACH LTD, Charity Number 1153306