Business credit database approved – Globes

Knesset Economic Affairs Committee chairperson MK David Bitan was left a lone figure at the head of the committee room table, where he voted “unanimously”, section after section, in favor of the bill to set up a credit database for businesses. After reading each section, Bitan declared “in favor” and announced “approved.” No other Knesset member from the coalition or the opposition bothered to attend the concluding session of what might turn out in retrospect to have been the most important financial reform in the 2026 budget.

“The fact that there are no members of Knesset here is because they all support the bill,” is how Bitan explained the thin attendance, which besides him consisted only of government officials. He said he thought the bill would pass quickly, without objections, in second and third readings in the Knesset plenum as well.

Behind the somnolent committee session lies a reform that the Ministry of Finance has been trying unsuccessfully to pass for nearly a decade in the framework of the Economic Arrangements Bill. In the 2026 state budget, which was passed two months ago, the initiative to set up a credit database almost reached the final straight, but once the legal adviser to the Knesset Adv. Sagi Afik determined that the reform had no connection to the budget and therefore had no place in the Economic Arrangements Bill, it seemed that it was going the way of many of the reforms split off from the bill – straight to the archives. Instead, shortly after the budget was passed, it returned to the agenda, and it is now expected to reach a vote in the Knesset plenum in the current session, before the election.

The explanation for the unusual result, even the Ministry of Finance admits, is the chairperson of the Knesset Economic Affairs Committee himself. Bitan, who is not known as an expert in finance, understood the importance of the proposal to the economy, took up the cause, and pushed to conclude the legislative process before the Knesset is dissolved. Prioritizing this measure halted many other government legislative initiatives. The opposition gave rare backing in an election period, and is expected to provide a majority in the final plenum vote.

The database itself, which will be set up within two and a half years (with the possibility of a six-month extension at the order of the governor of the Bank of Israel), will bring together financial information about businesses – credit history, payment ethic, and liabilities – and enable non-bank financial entities to assess the level of risk of potential borrowers.

The market for credit for small and midsize businesses is worth NIS 300 billion annually. 83% of the credit comes from the bank at which the business maintains its current account. According to a cautious estimate by the Ministry of Finance, setting up the credit database will lead to a saving of NIS 1.5 billion annually for these businesses through improved credit terms. The estimate is based on two studies by the Bank of Israel of the consumer market. One examined the “premium of the captive customer” after the credit database on individuals was set up in 2019. The second examined the market for credit for buying vehicles, which accounts for 80% of non-bank credit activity, and found a differential of almost a whole percentage point in interest rates between credit providers that used the database and those that didn’t.

What, then, will business owners gain? The short answer is that the reform will work on two different tracks, in accordance with the financial strength of the borrower. Businesses in a strong financial position will benefit from lower financing costs, as the banks and non-bank lenders will start to compete for the customers who until now were captives of their banks.

The main effect, however, will be at the other end of the scale: businesses that struggle to obtain credit from their banks or are denied it. For them, opening the database will not necessarily reduce interest rates, but it will enable them to obtain credit in the first place. “The underwriter of non-bank credit providers will be able to rely on verified information,” a Ministry of Finance source said, “and that will enable business hitherto considered risky to obtain credit, perhaps at a high rate of interest, but they will receive it.” The main rationale is that in the absence of regular sources of credit, many businesses with weak credit ratings resort to dangerous loans in the grey market.

Professional sources say that the main difficulty facing business owners today is the transition between growth stages – from a minuscule business to a small one, and from small to midsize. At these points, the business needs to invest in equipment, manpower, or advertising, but the available financial data sometimes don’t support the level of financing required. The main impact of the new database is expected to be felt at these junctures.

Published by Globes, Israel business news – en.globes.co.il – on May 24, 2026.

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