Getting a leg up

Paterson Hebrew Free Loan Association comes to Bergen

One hundred six years ago, a handful of Jewish Patersonians created a "benevolent association" to provide interest-free loans to members of the Jewish community in Paterson and surrounding areas of Passaic County. In those days a Jew, often an immigrant, would come to town looking for opportunities and might need some financial assistance. He'd want to rent a room or needed directions to a kosher restaurant. The association would offer interest-free loans of $5 to $10 that would cover some living costs and possibly the rental of a horse and wagon so that the borrower could do some business and pay back the loan.

The founders were local businessmen who realized they could help local folks. Paterson's first lady, Miriam Barnert, the wife of Mayor Nathan Barnert (for whom the Reform congregation now in Franklin Lakes and the hospital still in Paterson were named) helped expand the society and enhanced the endowment for what later came to be known as the Paterson Hebrew Free Loan Association.

Sigmund Westerman, president of today's association, thinks that this must have taken place just before World War I. He told the Standard that the historical significance is that "this was the period of significant immigration of European Jews to America, so there was plenty of need. Today, our organization has grown, and right now has more than $70,000 out there helping people to help themselves."

With that much money floating around the community, wouldn't there be a good chance that people wouldn't pay them back? After all, many people default on interest-paying loans. "Not so," says Westerman. "Over the years, the tens of thousands of loans were issued totaling millions of dollars, with a default rate of less than one percent."

How is that possible?

"This is not a charity," says Westerman. "A borrower comes to us for money, and since he has the obligation to repay it, albeit with a simple repayment schedule, the obligation becomes important. The other layer is that each loan is endorsed by someone who is known to the borrower, so accountability becomes even more important, simply because people don't want to embarrass themselves."

This is how it works: Say a borrower needs a $3,000 loan for something — anything from a business loan to a vacation. The applicant files forms and provides three "endorsers" — co-signers. The credit-worthiness of the endorsers is checked by the association, though the borrower's is not. The association issues the loan and the borrower repays it in equal payments over a '0-month period. Each endorser must own property in Bergen or Passaic county, and the borrower must be Jewish and a resident of either county.

Westerman tells a story: "One day the association got a sizeable donation from someone in Silicon Valley, Calif. He enclosed a note that thanked us for lending him the money 1' years ago, because it helped him launch his successful software business. The money he borrowed from us had allowed him to buy his first desktop computer and sent him on his way."

One woman, who left her piano behind in Russia when she immigrated to America, missed it so much, she approached the association for a loan to buy a new one, and the loan was granted. "She was very happy and grateful. She took out subsequent loans to visit Israel and fulfill some of her dreams. She always paid us back on time."

Westerman has been involved with the association since 1983, and his wife, Fran, has been executive secretary for the last four years. "This job is no job, it's a pleasure," he says, "because of the satisfaction we get from helping people. We help people pay yeshiva tuition, graduate students call us. Sometimes we help with medical expenses — the list is endless. We get letters of appreciation that touch us deeply."

Fran Westerman quotes from Exodus '': "'You lend money to my people, do not act toward them as a creditor. Exact no interest from them.' This is the credo that drives our service to the community."

Residents of the Bergen and Passaic Jewish communities can join the association by paying $'5 in annual dues. For applications, information, or to give donations, write to Paterson Hebrew Free Loan Association, 10-10 Norma Ave., Fair Lawn, NJ 07410, or call ('01) 791-8395.