Granting an interest-free loan is not just nice, it’s a mitzvah (Exodus 22:24). For how much? As much as the borrower needs, as much as you can afford. If he needs and asks, and you turn him down, his cries are heard on high—and that’s dangerous stuff. On the other hand, give him that loan and “you shall call and G‑d will answer; you shall cry and He will say, ‘Here I am’” (Isaiah 58:9).

Lending money interest-free is the highest form of tzedakah (charity), far greater than giving free handouts. A handout may preserve a life for a day, but a loan preserves that sense of self-sufficiency necessary to get back on your feet. That’s why every Jewish community is expected to support at least one interest-free loan society.

Unlike tzedakah, free loans are for both the poor and the richWhat if someone is not needy, but would like a loan to make more money? Perhaps not as great, but still a mitzvah. Unlike tzedakah, free loans are for both the poor and the rich.

Some important details:

  • Don’t grant the loan if you believe that the money will be squandered and the borrower won’t have the means to repay.
  • It is expressly forbidden for two Jews to transact a loan that involves any form of interest whatsoever. If the loan is for business purposes, a halachic contract can be drawn up that makes the lender a partner in the business, thus entitling him to some of the profits. Speak to a rabbi to facilitate this procedure.
  • Don’t press a debtor if you know that he is unable to repay the debt. Don’t even appear before him, even without making any demands, lest he be frightened or shamed.
  • On Sabbatical years, all loans are voided. Click here to learn how to avoid being voided.
  • No loan should be made without either witnesses or a written contract.