UJC, Koret work to bolster Israels flagging North

When Hezbollah rockets started falling on Kiryat Shmona last summer, Dror Museri shut down his locksmith, safe and bike shop and fled with his wife and twin toddler daughters to Tel Aviv.

The three-man operation his father started 40 years ago lost an entire month of income during the 2006 war against Hezbollah, and the situation got worse on their return.

“We started to pick up ourselves from that very hard month, but in the first days, the first weeks, we didn’t have one customer,” he said. “Nobody came to the store. No customers. No business. No nothing.”

A year later, not much has changed.

It is small businesses like Museri’s that the United Jewish Communities is trying to save by allocating more than $35 million to boost the economy in northern Israel, the region hit with thousands of Hezbollah rockets during the war — including $23 million designated to the S.F.-based Koret Foundation’s Israel Economic Development Funds. At the center of this economic initiative are two projects that guarantee loans for small businesses, KIEDF’s bread-and-butter.

The money is part of the $360 million UJC and its companion network of North American Jewish charitable federations raised during their Israel Emergency Campaign. The funds are also going to help rebuild the North, improve its education system and provide ongoing treatment for trauma victims.

More than any other program UJC is funding, its economic development initiative is key to keeping Israelis in the area, said Carl Kaplan, the Tel Aviv-based managing director of the Koret development funds.

“It is a worldwide accepted axiom that small businesses create jobs,” Kaplan said. “If you pump money into small- to-medium businesses that are not tourist-based, you have an opportunity to further develop the economy in the North.”

While Israeli banks often require 100 percent collateral in order to obtain a loan, Koret has brokered a deal so borrowers can get by with the 20 percent fronted by KIEDF (a longtime beneficiary of the S.F.-based Jewish Community Federation, incidentally).

This second program could result in an additional $165 million in loans — which would mean a total of $200 million in total for northern businesses, as a result of the UJC-Koret partnership. In comparison, over the past 13 years, the Koret development funds have secured about $140 million worth of credit resulting in 4,650 loans for businesses all over Israel that, Kaplan said, have strengthened or created roughly 20,000 jobs.

The two new loan projects, Kaplan estimated, would create 1.5 jobs per family in northern Israel.

Among those who have benefited is Shiri Harkin, who sells holistic medicine made from her homegrown herbs out of a pint-sized storefront next to her house in Rosh Pina. Unable to sell her inventory after the war, she bounced several checks, which got her on a blacklist, making it impossible to write checks or get credit.

Harkin has been working with two Israeli incubators, which helped her straighten out her finances and obtain a small loan of less than $10,000. Now she has two deals with chains of spas that will use her line of herbal remedies.