This installment addresses whether a foreign lender must obtain an Israeli lending license before extending credit in a transaction with an Israeli nexus.

Israeli law broadly requires a license for non-bank credit activity, but the exemption regulations include important safe harbors for regulated OECD banks, qualifying corporate loans of at least NIS 3 million and lenders focused on innovative R&D companies.

Foreign banks and specialist venture-debt funds will often qualify for an exemption, but the analysis depends on the lender's status, business model and the specific structure of the transaction.

Using an Israeli entity as a guarantor rather than a borrower does not necessarily remove the transaction from the licensing framework.

Because non-compliance can lead to substantial fines and, in some cases, criminal exposure, the applicable exemption should be confirmed before the lender commits to the structure.

This installment outlines the principal Israeli tax issues that foreign lenders should address when financing an Israeli technology company.

Interest paid by an Israeli loan party to a non-Israeli corporate lender is generally subject to Israeli withholding tax, although an applicable treaty may reduce the rate and typically requires a specific certificate from the Israeli Tax Authority.

Gross-up allocation is therefore a material economic term that should be settled at the term-sheet stage, particularly because the tax treatment of warrants and other equity kickers remains an evolving area.

Israeli VAT may apply to interest and fees, while a limited statutory exemption under the Angels Law is available only where demanding borrower, loan-size and lender conditions are satisfied.

The practical takeaway is to model the tax leakage early, coordinate with local tax advisers and determine whether the Israeli entity should be a borrower, co-borrower or guarantor before finalizing the economics.

This installment summarizes the Israeli insolvency framework and the process by which a lender enforces security over Israeli assets.

The Insolvency and Economic Rehabilitation Law preserves secured-creditor priority subject to statutory exceptions, but it also permits certain transactions and security interests to be set aside during pre-insolvency suspect periods of three months, two years or, in cases involving asset extraction, up to seven years.

Foreign lenders generally cannot rely on contractual self-help remedies in Israel and must enforce through the courts, demonstrate the relevant event of default and obtain the appointment of a receiver.

The receiver acts as an officer of the court, and asset sales will ordinarily require a competitive process and subsequent court approval.

Lenders should therefore perfect security promptly, avoid late-stage collateral enhancements that may be vulnerable to challenge and build court-supervised enforcement timing into recovery assumptions.

This installment addresses the legal and tax risks arising when an Israeli subsidiary guarantees obligations of its parent or another group company, particularly in acquisition financings.

Israeli corporate law requires the guarantor to act for its own benefit, so the transaction record should clearly document direct or indirect corporate benefits such as access to group funding or operational synergies.

An upstream guarantee connected to the acquisition of the guarantor or its parent may also be challenged as an unlawful distribution unless the statutory profits and solvency tests are satisfied.

The guarantee and related security may face additional fraudulent-conveyance scrutiny in a later insolvency, and the Israeli Tax Authority may treat the arrangement as a deemed dividend or distribution.

Effective risk management therefore requires tailored limitation language, robust board approvals, contemporaneous solvency and benefit analysis, and coordinated corporate, insolvency and tax review.

This installment identifies Israeli-specific issues that should be resolved at the term-sheet stage rather than deferred to definitive documentation.

The parties should determine whether the Israeli entity will be a borrower, co-borrower or guarantor, which entities will provide collateral and whether any subsidiaries will be excluded subject to a negotiated threshold.

The term sheet should also allocate withholding-tax gross-up risk and define the intended collateral package, including the treatment of intellectual property and restrictions on cash held in Israeli bank accounts.

Key covenants and information rights should reflect local realities, including IIA funding restrictions, the timing of audited financial statements and the lender's required access to liquidity, receivables and corporate information.

Warrant coverage or participation rights should be structured with the Israeli company's constitutional documents, shareholder protections and required corporate consents in mind, so that core economics and execution risks are aligned from the outset.

This installment provides a practical overview of the filings required to perfect security interests under Israeli law.

Security granted by an Israeli company is generally registered with the Registrar of Companies, while security granted by individuals, partnerships and foreign entities is registered with the Registrar of Pledges; patents and real property may require additional specialist filings.

A Companies Registrar filing made within 21 days can preserve priority from the security agreement's creation date, whereas a late filing is effective only from registration, and Registrar of Pledges filings do not benefit from retroactive perfection.

The underlying Israeli security agreement filed with the Companies Registrar becomes publicly accessible, which supports using a standalone local security document rather than filing the principal credit agreement.

Closing mechanics should account for Hebrew collateral descriptions, limited powers of attorney, wet-ink signature requirements, processing times and any parallel filings needed to ensure the security is effective against third parties.

Arnon, Tadmor-Levy advises Israeli and international lenders and borrowers throughout the lifecycle of venture-debt, private-credit and technology acquisition-financing transactions. The practice combines banking and finance, high-tech, venture capital, tax, regulatory and insolvency capabilities in a single cross-border offering.

The team handles both complex and market-standard structures, with an emphasis on commercially workable documentation, effective Israeli collateral packages and the practical requirements of scaling technology companies and sophisticated credit providers.