(WSJ Houses of Worship) Tamar Snyder: When Religion Restricts Forbids Lending

“As business capital is assumed to be both outside the intent of the prohibition and an indispensable element of the modern economy, it was considered appropriate to find a method to allow it,” says Rabbi Daniel Feldman of Yeshiva University. While some authorities historically opposed the heter iska, which is only to be used for business purposes, it is widely accepted as meeting both the letter and the spirit of the law, says Rabbi Feldman.

In our difficult economic times, interest-free loans may be more important than ever. In Dallas, the local Hebrew Free Loan Association offers a variety of them, including for life-cycle events, adoptions, home health care and education. And Hebrew free-loan societies boast inordinately low default rates of less than 1%. “There is a sense of religious obligation on both sides,” says Mr. Sarna.

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