Q: Is there any requirement to grant an interest-free loan or just a prohibition to charge ribbis?
A: It is important to realize that there is a great mitzvah to grant an interest-free loan when a person is able to, not just a prohibition against charging ribbis. This is a fulfillment of the verse (Shemot 22:24), “When you lend money to My people…” (C.M. 97:1)
The amount and duration of loan that a person is required to lend depends on his financial ability and the needs of the borrower. You are not required to borrow money or sell assets to grant a loan, but money which is deposited in a checking or savings account is considered available. (Ahavas Chesed 1:4-5,12; Pischei Choshen, Halva’ah 1:9)
A person can apportion some of his ma’aser kesafim for the purpose of granting interest-free loans, either through a gemach (free-loan fund) or private loans. The Chofetz Chaim recommends apportioning a third of one’s ma’aser for loans at first, until he has amassed a sufficient amount for granting loans. (Ahavas Chesed, II, 18:1)
However, a person is not obligated to grant a loan if he does not have sufficient security, collateral or guarantees from the borrower that he will repay. (C.M. 97:4; Ahavas Chesed, 1:8)
Authored by Rabbi Meir Orlian
These articles are for learning purposes only and cannot be used for final halachic decision. The Business Halacha email is a project of Business Halacha Institute (www.businesshalacha.com) and is under the auspices of Rav Chaim Kohn.
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What if you are uncomfy with the borrower’s ability to repay? Can you take a maashkon? are there limits as to the loan-maashkon value ratio?
Did you hear the story of the guy who borrowed $500 from a bank for six months to go to London and he left his Rolls Royce as a collateral (maashkon)? The banker asked, WHEN HE CAME TO REPAY THE LOAN, why the owner of a Rolls would need to borrow $600. To which he answered, “it’s the cheapest garage services fee I found anywhere!