Less Is More For Hebrew Free Loan
Arkadiy Ugorskiy, a refugee from Russia, realized a couple of years ago that he faced a new and formidable obstacle to making it in the U.S. in the field of video production. Although Ugorskiy, who studied cinematography in a top Moscow studio, had succeeded against the odds in building his business “from nothing” after arriving in Brooklyn in 1998, at 44, he couldn’t afford to buy the high-definition video equipment that was quickly becoming the standard in the field.
Ugorskiy, who did video editing for local Russian-language TV and made fundraising videos for local yeshivas and businesses, looked into taking a bank loan to buy the equipment. But he was deflated to learn that all such loans came with a 10 percent annual interest rate plus additional fees, which were well beyond what he could pay back.
Then in mid-2008, just as the economic tsunami was about to devastate the U.S. economy, Ugorskiy learned about the possibility of applying for a microenterprise loan from the Hebrew Free Loan Society. The 117-year-old institution has been making interest-free loans to economically challenged Jews here since the days when many recently arrived and unemployed residents of hardscrabble Jewish neighborhoods like the Lower East Side needed help to purchase a pushcart.
Ugorskiy applied for and received a $25,000 loan from the HFLS Microenterprise Lending Program, which came with a condition that he take a course in business training. Based on that training, Ugorskiy and his wife Natalya, a fashion designer, incorporated his business and purchased the equipment he needed.
With his new high-definition video camera and other equipment in hand, Ugorskiy was soon making promotional videos for high-profile firms like Sikorsky Aircraft Corp. and Navigator Insurance.
“I am enormously grateful to HFLS, since I could never have gotten the high-definition equipment I needed to succeed without the interest-free loan they gave me,” Ugorskiy said. “I have always been a cameraman and not a businessman, so the business training I received at HFLS was vital in terms of teaching me skills like accounting. In short, the loan I received from HFLS — and the business training that came with it — has definitely taken me to the next level in my profession.”
The Microenterprise Lending Program that transformed the life of Arkadiy Ugorskiy is the newest in an arsenal of Hebrew Free Loan Society loan programs for members of the New York Jewish community who are in distress. Other programs include general aid loans to immigrants; loans to help immigrants pay for higher education, Jewish education and professional retraining; and loans for families, mainly from the ultra-Orthodox community, with large numbers of children.
In the two years since the founding of the Microenterprise Lending Program, HFLS, a UJA-Federation of New York beneficiary, has dispersed $2.4 million in business loans of up to $25,000 each. The vast majority have gone to members of the two most economically vulnerable groups here: Russian-speakers like Ugorskiy and members of ultra-Orthodox communities in neighborhoods like Williamsburg, Borough Park and Crown Heights.
The program has taken on added significance since the onset of the recession one year ago, since it makes available interest-free loan money to economically stressed members of the Jewish community who would otherwise never have been able to secure bank loans, to start small businesses.
On the occasion of HFLS making its 100th microenterprise loan earlier this month, HFLS executive director Shana Novick pointed out that “Microenterprise has always been at the heart of our agency’s core mission ... helping families to achieve and sustain economic self-sufficiency.”
According to Novick, “What we are doing now in our microenterprise program is the 21st century equivalent of the pushcart, except that we have understood that if you want to help economically marginal people in a developed country like the U.S., you can’t just provide them with credit. We must also make sure that those receiving business loans receive business training if they are to have a chance of success.”
Novick added, “We teach people how to make a business plan, how to manage the books, how to market their product and to whom to market. By requiring people receiving our business loans to take business training, we help them to greatly increase their chances of making their businesses a success.”
Novick noted that HFLS’ business-skills training (how to make a business plan, market a product, etc.) is done in a “culturally sensitive way”; it provides the training to members of the immigrant community in Russian and offers gender-separate training to members of the ultra-Orthodox community.
“Our business training for FSU immigrants, which takes place at the Jewish Community House of Bensonhurst, is the only such program in the city that is given in Russian,” Novick explained. “This is important, since many of the immigrants are people in their 30s, 40s and 50s who are highly educated but are unable to translate their skills into highly paid jobs here in the U.S. both because of age and language difficulties.”
Novick added, “In the ultra-Orthodox community, the typical client is much younger — often in his or her 20s — and has a growing family. Their impediment to success is that they have received limited secular education. But they are entrepreneurial, and the gender-separate training we provide, run by Orthodox professionals, helps them to master the skills needed to create and sustain small businesses that may provide their families with financial security.”
She noted that recipients of HFLS microenterprise loans have started businesses within the ultra-Orthodox community such as gift stores and insurance brokerages, and a number of women who are home with children have started Internet-based businesses.”
Novick is proud of the fact that HFLS has been there throughout the recession for clients in need who otherwise would have had nowhere to turn. “Banks stopped lending during the recession, but we have continued doing so, even though none of our clients are ‘bankable’ [with good enough credit to qualify for bank loans] and all would justly be termed ‘high risk,’” Novick explained.
“Yet of the 100 microenterprise loans we have made, only three might be termed ‘distressed’ [having missed two or more payments], and none are in collection.”
Novick noted that HFLS attaches such importance to its Microenterprise Lending Program that it took a loan from UJA-Federation of New York with a $1million line of credit to ensure it would be able to continue making business loans, and has been doing its own fund-raising on behalf of the program.
She noted that while the majority of microenterprise loans so far have gone to Russian-speaking Jews, it is projected that during the current fiscal year there will be 25 loans to members of the ultra-Orthodox community and only 15 in the Russian-speaking community.
Phil Schatten, HFLS’ treasurer and chair of the agency’s Microenterprise Lending committee, said, “We go into considering each loan request with a predisposition to help people to make it happen if we judge there is any chance at all for success.
“We are very pleased to be in a position to make a real difference for communities at risk and are confident that our Microenterprise Lending Program is having a major ripple in both the Russian-speaking and ultra-Orthodox communities. As more and more people become aware of this possibility, they realize that they are not alone in hard times and have somewhere to turn to help them realize their dreams.”