Interest-Free Loans: The Secret of Jewish Kindness

The Mitzvah of Providing Loans

Providing loans to those in need is one of the mitzvot which expresses the values of kindness and charity. The Torah states: "If you lend money to My people, to the poor among you, do not act toward them as a creditor" (Shemot 22:24). This verse emphasizes the obligation to lend money to those in need, especially if they are poor. A loan is not just an act of kindness, but also an obligatory mitzvah that promotes a sense of social solidarity.

The Talmudic Sages state (Shabbat 63a) that this mitzvah is greater than the mitzvah of tzedakah (charity).

When the Rich Are in Need

Rambam (Maimonides) writes: "Hashem commanded us to lend to the poor to ease their hardship and provide relief, and this mitzvah is more obligatory than all mitzvot of tzedakah, because the distress and embarrassment of the person who has already revealed his poverty in public and extends his hand for tzedakah is unlike the distress and shame of the poor person who conceals [his condition and] who wants help before his poverty is exposed in public and he is humiliated.

"Therefore, the mitzvah of lending takes precedence and is preferable to the mitzvah of tzedakah, as it shows greater consideration for the suffering of others."

Another reason why giving a loan is considered a greater mitzvah than giving regular tzedakah is that loans are for both the poor and the rich, while tzedakah is only for the poor (Sukkah 49b). The kindness expressed in this mitzvah is more general and comprehensive, affecting all relationships between people, while the mitzvah of tzedakah is an expression of kindness only toward a certain category of people.

Minimizing the Shame of the Borrower

The Midrash states: "Hashem said: If you lend money to My people, you will merit being in My presence."

The importance of the mitzvah of lending to others can also be understood from the words of Rabbi Ezra Batzri, who wrote:

"There is no need to elaborate on the greatness of this mitzvah, as almost every person needs loans at some point, and everyone knows how much pain and shame one feels when asking for a loan and being turned away empty-handed.

"Therefore, everyone should remember this when someone comes to them asking for a loan and they have money available — they should not harden their heart and turn someone away empty-handed. If they are concerned that the borrower might not repay the loan, they can take collateral or seek reliable guarantors to secure their money. But they should not refrain from lending."

Selfish and Unselfish Loans

The Chofetz Chaim in his book Ahavat Chesed writes: "There are two types of loans, one praiseworthy with nothing comparable to it, and the other evil. A good loan is one whose main purpose is to perform kindness with others and to help them. And a bad loan is a loan with interest, whose entire purpose is selfish."

In other words, one can do almost the identical act — lending money to others — but when lending without interest, the goal is to help others; when lending with interest, one is interested primarily in oneself.

The Prohibition of Interest

Regarding loans with interest, the Shulchan Aruch states: "Anyone who gives a loan with interest — their assets collapse, and it is as if they denied the Exodus from Egypt and the God of Israel." In the Exodus from Egypt, Hashem taught us to practice kindness, so how can a Jew exploit another person's difficult situation and desperate need for money to enrich himself? This is nothing but a denial of Hashem and the kindness He did for us when he brought us out of Egypt.