To Lend or Not to Lend?
Question: The manager of a Free Loan Fund (“gemach”) requires of those who borrow money to give him personal checks that are dated for a later date as guarantees of payment. The depositing of such checks enables the Fund to lend money to other needy borrowers. Some borrowers have proved delinquent in their responsibilities and their checks have bounced, causing difficulties in managing the Fund and restricting its ability to serve others.
Is it proper for the Fund manager to refuse lending to these delinquent repayers in the future or must he overlook their behavior in light of their need?
Answer: If the failure to pay debts causes trouble for the Fund and infringes on the ability to serve other borrowers, it is certainly the prerogative of the Fund manager to penalize such delinquent payers by refusing to offer them further loans.
An interesting source for the right to refuse loans to such people despite the Torah command to lend money to the needy is to be found in the words of one of the early commentaries, Rabbi Yehuda Hachasid.
He notes that in its command to lend money the Torah states, “If you shall lend money to My people, the needy that are with you” (Shmot 22:24). Our Sages explain that although the term “if” generally means that something is optional, in the case of lending money it is obligatory. Why then, he asks, does the Torah use a term that can be misconstrued as being non-obligatory? The answer is that in certain situations there is indeed no obligation, such as in the case of a borrower with a bad record of repayment. In regard to such a person it is up to the lender to decide whether it will be better to lend or refuse.
(Based on the response of Rabbi Yitzchak Zilberstein, Rabbi of the Ramat Elchanan community in Bnei Brak.)