The Torah Commandment to Lend Money: Why Lending Is Greater Than Charity in Judaism

It is a positive commandment from the Torah to lend money to someone in need, as it says: “If you lend money to My people” (Shemot 22:24). This verse is one of three places in the Torah where the word “if” (im) is used, even though the meaning is not optional but a binding mitzvah.

The Sages teach in the Talmud (Shabbat 63a) that the mitzvah of lending money is greater than the mitzvah of giving charity.

The Power of a Loan

The Rambam (Maimonides) writes in Sefer HaMitzvot: “God commanded us to lend to the poor in order to ease their distress and broaden their means. This mitzvah is even stronger and more obligatory than charity. For when a person’s poverty is already exposed and he must publicly ask for help, his suffering and shame are not as great as that of one who hides his need and seeks help before being humiliated. Therefore, lending to him is both more compassionate and more meritorious than charity, as it spares him embarrassment and helps him preserve dignity.”

A loan prevents humiliation and empowers a person to recover — which is why it is considered a higher form of kindness.

Lending Helps Both the Poor and the Wealthy

The obligation to lend applies both to the poor and to the wealthy, while charity applies only to the poor (Sukkah 49b).

Thus, the kindness expressed in lending is broader and more inclusive, strengthening relationships and trust between people of all backgrounds. Charity addresses financial need, while lending builds community.

Two Kinds of Loans

The Chofetz Chaim, in his work Ahavat Chesed, distinguishes between two kinds of loans: “There are two types of lending: one good and incomparable, the other evil. The good loan is one given purely to help another person and do kindness. The evil loan is one given with interest — motivated by greed and self-interest.”

The same outward act of lending money can become either a mitzvah or a grave sin, depending on intent.

• Lending without interest fulfills a Torah commandment.

• Lending with interest exploits another’s hardship and violates one of the most serious prohibitions in the Torah.

The Dangers of Interest (Ribit)

The Shulchan Aruch (Yoreh De’ah 160) warns: “Anyone who lends with interest — his wealth collapses, and it is as if he denies the Exodus from Egypt and the God of Israel.”

The Exodus taught us compassion, mercy, and ethical behavior.
To profit from someone’s desperation is to betray the very foundation of Jewish faith and freedom.

The Torah mentions the prohibition of interest in several verses: “If you lend money to My people, to the poor among you, do not act toward him as a creditor; do not impose interest upon him” (Shemot 22:24).

Rashi explains the word “interest” (neshech) as derived from the root “to bite.” “Just as a snake bites and makes only a small wound in the foot, unnoticed at first, until the poison spreads through the whole body — so too interest begins subtly but ends by consuming the borrower’s wealth.”

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The Deeper Meaning Behind the Prohibition

In Shaarei Yosher, Rabbi Shimon Shkop explains the moral reasoning: “The Torah understood human psychology — that one who accepts a loan with fixed interest, though he agrees willingly, acts in error. He does not truly realize how much he harms himself through interest and compounding debt. Therefore, the Torah compared it to a snake bite — at first only a small pain, but in the end, mortal danger. Although legally it may not be theft (since the borrower agrees), in the inner truth of morality it contains the essence of robbery.”

Besides for the lender who violates the Torah prohibition of ribit (usury), the others liable include:

• The borrower,

• The witnesses,

• The guarantors,
  and anyone involved in facilitating the forbidden transaction.

A Halachic Business Partnership

To avoid violating the Torah prohibition while still allowing financial partnerships, Jewish law developed the “Heter Iska.”

In a heter iska, the money given is not a loan but an investment — a form of partnership.

• One party provides capital,

• The other provides labor or business management,
  and both share the profits.

For practical reasons, a fixed percentage of the profits is often pre-agreed, simplifying accounting while maintaining the spirit of partnership.

The heter iska ensures fairness: the investor expects a return, and the entrepreneur gains working capital — all without exploiting or endangering the other.