The Torah specifically commands us to help our fellow man with free loans: “If you lend money to my people, to the poor among you, don’t be like a creditor to him, don’t impose interest on him. If you should pawn your fellow’s garment, return it to him by nightfall.” (Shemot 22:24-25)
We might think that helping out a needy person with charity would be an even greater kindness, but our tradition clearly indicates the opposite. Giving a loan is considered a greater mitzva than giving charity, so much so that the Hebrew word for a free loan is a “gemach” – an acronym for “gemilut chasadim”, meaning “granting kindness”. This linguistic identity points to a cultural reality, that giving a loan is the basic act of mutual aid in Judaism.
This special importance is not only because the lender is getting no benefit from the loan. In fact, making a business partnership with a needy person, where there is an expectation of profit, is considered on an equal level with a loan. “The greatest level of charity, with nothing higher, is to strengthen the hand of a weakened Jew, giving him a present or a loan or starting a partnership, or giving him work.”
(SA YD 249:6. While a present is also mentioned, the intention is not a hand-out but a normal present like those given among equals, where there is an expectation of reciprocation.)
FAITH IN OUR FELLOW MAN
One reason we can identify why a loan is even more beneficial than a hand-out is that it indicates that the lender has faith in the borrower. In this way it provides not only material support but also moral support.
This faith has two aspects. On the most basic level, giving a loan shows faith that the borrower is an honest person who won’t disappear with the money. But a loan also shows the lender’s faith that the borrower is a successful person – one who, though he has fallen on hard times, is sure to recoup his losses and find himself earning a respectable income. Very often the monetary difficulties caused by financial setbacks are the least of the problems. A few bad seasons in business or losing a job can cause a person to become discouraged about the future and lose hope. The encouragement provided by the lender’s faith in the borrower may be even more important to the needy person than the money itself.
A FELLOW, NOT A SLAVE
This aspect of encouragement is particularly evident in the various limitations on collecting a loan. The passage we cited states, “Don’t act like a creditor” towards the borrower, meaning don’t hound him for repayment if you know he can’t pay. (Rashi.) Other limitations on collection include the rules which prevent collecting from possessions which are essential to the borrower’s livelihood, including the following verse which indicates that we may not take the borrower’s garment as a pledge unless we return it when he needs it.
Indeed, in ancient times the borrower himself, or his family members, were themselves pledged to a loan and could be enslaved if a loan was not repaid (Melakhim II 4:1), and even today debtors may be put in prison for failing to repay a loan.
Such drastic collection measures contradict the idea of encouragement in two ways. First of all, if the loan has the effect of subjugating and demeaning the borrower, it will not be very successful in providing him with moral support.
Furthermore, if the lender has iron-clad guarantees that he will get his money back, then the loan is not much of a vote of confidence. But since the lender is limited in his ability to seize assets and can’t “lien” the borrower himself, his loan shows his confidence in the borrower’s ability to improve his financial situation.
Of course the halakha demands that the borrower do his best to be worthy of this confidence, and not make unnecessary expenditures or unjustified gifts which would prevent the lender from recouping his investment. Of such a borrower Scripture states, “It is a wicked borrower who doesn’t repay.” (Tehillim 37:21)
Rabbi Meir has completed writing a monumental companion to Kitzur Shulchan Aruch which beautifully presents the meanings in our mitzvot and halacha. It will hopefully be published in the near future.