The Hebrew Free Loan Society (HFLS) of New York, also known as the Hebrew Gemilath Chassodim Association,[1] founded in 1892,[2][3] is the oldest money gemach in the United States.[4][5] It spawned similarly named free-loan funds in many other cities, including Washington, D.C.; Philadelphia, Pennsylvania; and Holyoke, Massachusetts.[4][6]
The Hebrew Free Loan Society is an organization that has been serving the community since 1892. Rooted in Jewish tradition, it provides interest-free loans to residents of New York City's five boroughs, Westchester, and Long Island, regardless of their ethnic heritage or religion.[2][3][4] HFLS offers a variety of loan programs tailored to different needs, such as small business support, education, health care, housing, and even adoption or fertility treatments.[2][3] It is considered to be a "benevolent loan provider," and not a bank or credit union.[4]
Cited as an example of how American Jews had "developed some of the most impressive philanthropic networks in the world", the free loan society has made made more than $380million in loans since its founding, with a 99.9% repayment rate.[7][8][A]
History
The organization was founded on Henry Street on the Lower East Side in 1892 by a group of 11 men who contributed $95 towards making free loans.[9] The organization's mission to make "free loans" was based on adherence to Jewish law prohibiting charging interest on loans, based on such biblical admonitions as the verse in Exodus (22:25) stating "If thou loan money to My people, to the poor by thee, thou shalt not lay upon him interest."[2][3][B] As to motive for these efforts, "Edward A. Filene, a Boston Jewish department store owner and philanthropist, encouraged low-interest loans because, in his own words, he wanted to 'fight the age old prejudice that all Jews were usurers.'"[11]
The goal of the organization was established early:
... to loan money to poor people without charging any interest or any expense whatsoever.” The HFLS Constitutions and By-Laws stated no barrier to race or creed in issuing loans, but only to “organize a society whose object shall be to loan to those in need certain sums of money instead of giving alms, and thus assist respectable people, whose character and self-respect abhor the thought of receiving alms, to overcome the difficulties in their struggle for the means of existence....[4]
Using money provided by contributions, the society provides small, interest-free loans which are paid back in regular installments. The group made $1,200 in small-denomination loans in its first year, repaid in ten equal monthly payments and guaranteed by someone with good credit, which had expanded to more than $360,000 loaned to 15,000 borrowers by 1905.[2][3][9] Their mission was to make a discernible difference in the community.[E]
At their peak, there were more than 500 such societies operating in the United States. Additionally, there were hundreds more that were ancillary with synagogues and fraternal organizations.[6][11][14] They provided capital to immigrants who were unable to attain loans from traditional sources, such as banks. In 1920 alone, the Hebrew Free Loan Society of New York distributed more than a million dollars to Jewish-owned small businesses.[11]
The Great Depression resulted in a spike in borrowing in 1929 to more than $1.1million in loans, almost triple the $400,000 loaned five years earlier, much of it made to small business owners who could no longer borrow from traditional banks. For the year 1929, the organization reported that borrowers had defaulted on less than one-tenth of a percent of all loans that had been made the previous year.[F]
In the early 1970s, the Free Loan Society made a series of larger loans to ChabadHasidim who were making down payments on homes as part of an effort to help maintain the core of the Jewish community around the organization's headquarters at 770 Eastern Parkway in Crown Heights, Brooklyn, that had seen many white residents leave the neighborhood.[H]
By the 1980s, the Free Loan Society was making $2million a year in free loans, by which time the organization had made more than $80million in loans.[9] While most of the loans are made to Jews, the organization is non-sectarian and has donated to people of varied backgrounds and religions.[9] In 1982, the organization reported that all but $100 of the $2million in loans had been repaid, with most defaults historically being related to the death of borrowers.[9]
From 1892 and as of 2023, the Hebrew Free Loan Society has provided more than 900,000 borrowers with more than $400 million in interest-free loans.[8]
Income: Household income must fall within low to moderate levels, as defined by the Department of Housing and Urban Development's guidelines. Specific income limits vary based on household size.
Guarantors: Depending on the loan program, applicants need one or two qualified guarantors. These guarantors must have good credit, meet their current debt obligations, and demonstrate the ability to repay the loan if necessary.
Purpose: Loans are provided for specific needs, such as education, healthcare, small business support, or emergencies. Each loan program has its own requirements. Business loans are available.[I]
HFLS is non-sectarian, which means that applicants do not need to be Jewish to qualify.[9][J]
↑ "Traditionally, the Gemach has been a financial institution, whereby members of the community could take an interest-free loan to pay off medical bills, purchase a funeral plot, or arrange a wedding. The first Gemach of this kind in the United States was the Hebrew Free Loan Society of New York, established in 1892 by ten friends pooling together $95. Since its founding, it claims to have loaned over $380 million to 900,000 borrowers, with a 99.9% repayment rate."[5]
↑ "On a December evening in 1892, 11 men met at the Wilner Synagogue on Henry Street in Manhattan and pooled their savings - $95 - to establish a free loan society similar to those they had known in their native eastern European countries.... Today the society is still making interest-free loans to immigrants, giving out $2 million each year since 1976. Although the society still lends the majority of its money to Jews, it has been a nonsectarian organization since its founding.... On the 75th anniversary of the society in 1967, it reported that it had made loans totaling more than $52 million to more than 776,500 people. Since then the society has lent more than an additional $30 million."[10]
↑ "On a December evening in 1892, 11 men met at the Wilner Synagogue on Henry Street in Manhattan and pooled their savings - $95 - to establish a free loan society similar to those they had known in their native eastern European countries.... Today the society is still making interest-free loans to immigrants, giving out $2 million each year since 1976. Although the society still lends the majority of its money to Jews, it has been a nonsectarian organization since its founding.... On the 75th anniversary of the society in 1967, it reported that it had made loans totaling more than $52 million to more than 776,500 people. Since then the society has lent more than an additional $30 million."[9]
↑ "Since that time the Society has loaned many millions of dollars without impairment of its original capital which has been increased by donations and bequests on the part of such men as the late Jacob H. Schiff, The Baron and Baroness DeHirsch, Adolph Lewisohn and many other leading figures in Jewish philanthropy."[12]
↑ The Society "fosters economic self-sufficiency and economic security among New Yorkers in need through interest-free lending. We do this work in partnership with others to ensure that our programs respond to identified needs, that we are nimble in adapting to the dynamic changes in our community, and that we make a discernable [sic] difference in the lives of those we serve. Hfls loans make an immediate, concrete difference in the lives of our borrowers, enabling them to invest in their education, start a business, meet emergency expenses, and more."[13]
↑ "Business depression during the latter part of 1929 caused a sharp increase in the demands upon the Hebrew Free Loan Society, according to the annual report of its president, Julius J. Dukas, delivered at the annual meeting yesterday afternoon."[15][16]
↑ "Mr. Durst was also president from 1945 to 1972 of the Hebrew Free Loan Society, which makes loans without charge to needy individuals of any faith and to Jewish community organizations, largely in the field of religious education."[17][18]
↑ "In an effort to anchor their traditional community in the Crown Heights section of Brooklyn, Lubavitch Hasidic Jews are buying houses in their neighborhood with the aid of interest‐free loans. The loans — ranging from $2,500 to $3,500 — have been provided by the Hebrew Free Loan Society, an organization that started in 1892 to give immigrants financial aid."[19]
↑ ”The Hebrew Free Loan Society advances economic stability and opportunity for lower income New Yorkers within and beyond the Jewish community by making safe, affordable interest-free loans. The Small Business Loan Program provides interest-free loans of up to $50,000 to low- and moderate-income residents of New York City's five boroughs, Westchester, or Long Island to help launch or expand a business.”[21]
↑ Some Free Loan Societies are sectarian. For example, Cf. Jewish Federation of Central New York.[22]
↑ "The Community Of Helping Hands", Newsday, January 23, 1989. Accessed March 21, 2025, via Newspapers.com. "The Hebrew Free Loan Society, which had its origins in 1882 when 11 immigrants met in a synagogue on Henry Street and among themselves raised $95 to help their neighbors, today has a 99.99 percent pay-back rate, according to Arnold Teitelbaum, its executive director. The 11 founders based their policy on an admonition in the Book of Exodus: if thou lend money to any of my people, thou shalt not lay upon him interest.'"
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