Cleveland Plain Dealer Article
The following article ran in the Thursday, September 27, 2007 edition of The Plain Dealer:
Hebrew Free Loan Association offers helping hand to Clevelanders
By Barb Galbincea
This is a story about free loans.
Really.
People usually don't believe it when Rabbi Susan Stone says the Hebrew Free Loan Association she heads can lend them money, interest-free.
"They always ask, 'What's the catch?' " she said.
But the fact is that the Beachwood-based association - with a two-person staff - has lent more than $7 million since it was founded in 1904.
The only "catch" is that the borrower is expected to repay the money so that others can be helped.
The first loan was $25 to a peddler who wanted to buy and stock a pushcart. Since then, people have sought loans for everything from braces and breast implants to home repairs and college tuition.
The association, part of an international movement that began in the 19th century, serves only Northeast Ohioans with genuine need who don't qualify for conventional bank loans. But they must demonstrate their ability to repay the money and have credible co-signers willing to vouch for them.
The guiding principles come from the Torah and commandments that forbid Jews from charging interest. Loans are made regardless of race or creed.
In the beginning, the local association served mainly immigrant Jews resettling in Cleveland. Today's borrowers include Muslims, natives of China and other countries, and a growing number of people from the suburbs. Stone estimates that about a quarter to a third of borrowers are foreign-born.
In 2005, the association made 22 loans, not counting those to students. Last year, the number grew to 48 and is on track to reach about 70 this year, according to Stone, executive director since 2005.
The amounts are relatively small - averaging about $2,000 a loan - but she thinks the impact of microlending can be huge.
For instance, she said, a Cleveland family can be lifted out of poverty by a car loan that allows an unemployed mother or father to get to work in the suburbs.
Or, Stone recounts the story of a woman who worked hard to become a licensed practical nurse and now needs a little help to become a registered nurse, at a significantly higher rate of pay.
That would also boost what the woman contributes in taxes, helping the community at large, the rabbi noted.
Another woman came seeking a loan bearing 4-by-6 photographs of the bruises she said her husband inflicted. She wanted to borrow money for attorney fees.
And as for the exotic dancer who applied for a loan to enhance her natural assets, the request was before Stone's time so she isn't sure how the board's volunteer loan committee ruled.
"Would you call that the cost of doing business?" she muses, with a smile.
Those who get loans for more than $5,000 - up to the maximum $7,500 - have three years to repay the debt; two years for loans between $3,000 and $5,000; 15 months for those between $1,000 and $3,000; and a year for loans of less than $1,000.
Student loans are limited to $5,000, but not all at one time.
The overall collection rate is about 98 percent.
Why do so few borrowers default?
"I think people, hopefully, feel a moral obligation to repay us," Stone said. "They understand that if they don't, we can't help other people."
At any one time, she said, the association has from $200,000 to $250,000 in active loans. The revolving loan fund, of more than $500,000, was built entirely on donations.
Maury Feren, who turns 92 this week, said the Hebrew Free Loan Association was a lifesaver for him, his parents and three siblings during the Depression.
His father's wholesale produce business pretty much disappeared during those winters, leaving the family all but destitute. So, for at least five years, Feren's mother would regularly take her plain, gold wedding ring to the Hebrew Free Loan Association, which would hold it in return for a loan.
When the produce business improved, said Feren, his mother would pay off the loan and retrieve her ring.
"It enabled us to maintain some kind of dignity," he said. "That was very important to my mother. She didn't want to accept charity."
The association no longer accepts pawn as collateral, but the need for free loans is undiminished, according to Feren.
"It's wonderful, wonderful work that they do."
