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Businesses in the north and south of the country that have been waiting for government aid may be in luck, with the launch yesterday at the President's Residence in Jerusalem of a new initiative for the development of the Negev and Gilboa, by Koret Israel Economic Development Funds and Bank Leumi.

Over the next seven years the initiative will make available a total of NIS 600 million in credit for the development of small and medium-sized businesses. Officials say they hope that more than 3,000 businesses will take advantage of loans ranging from NIS 50,000 to NIS 1.2 million, which will be offered at the relatively low interest rate of prime plus 1.5%.

The Overseas Private Investment Corporation, an independent U.S. government agency that facilitates private investment in emerging and transitional foreign markets, is providing $10 million in guarantees to assure implementation of the program. American Friends of Koret Israel Economic Development Funds and Portland Trust are among the first financial supporters of the program.

At yesterday's ceremony President Shimon Peres said that the joint undertaking "answers several needs, the foremost being reducing unemployment and poverty. Creating 8,000 new jobs and factories is the best answer to such challenges."

KIEDF Chairman Eival Gilady said that the "allocation of credit to businesses in the Negev and Gilboa will create significant development in the regions and grant much-needed economic oxygen to many business owners and entrepreneurs. This program will develop jobs, increase production, income and decrease unemployment - important steps for improving the economic situation of Israel's periphery."

KIEDF was established under the leadership of Managing Director Carl Kaplan 16 years ago, for a small initiative in the Negev. "Now we are returning in a big way to the Negev to finish what we began a decade and a half ago," Kaplan said.

The organization operates a diverse range of programs for economic development and for narrowing inequalities in Israel society.

Since its inception KIEDF has facilitated close to NIS 900 million in financing to nearly 8,000 small and micro businesses in Israel, while creating and supporting more than 40,000 jobs. KIEDF created a special fund to support residents of northern Israel during the Second Lebanon War in 2006, and for residents of the area near the Gaza Strip during Operation Cast Lead last year.