Zero-Interest Loans, a Century-Old Idea, Available to Santa Barbarans

In the Torah — or Old Testament — there is a line that says, in basic English, that whatever you lend to someone, you should expect only that back. It is a rarity to find a loan with zero interest, with no profit back to the entity that gave it out in the first place. 

The Jewish Free Loan Association (JFLA) has stuck to that millennia-old idea. The nonprofit, founded in Los Angeles in 1904, now provides zero-interest loans across Los Angeles, Ventura, and Santa Barbara counties.

The organization recently opened its 2026 student loan application cycle, offering education loans of up to $10,000 per school year to qualified borrowers — with no interest and no fees.

Despite the name, the program serves anyone. “We lend to all people — all faiths, colors, creeds, religions,” said Mimi Sroka, JFLA’s director of programs. “It doesn’t matter.”

The philosophy behind the model is simple: help people stabilize financially without trapping them in debt. “We are not here to profit off anybody,” Sroka said.

Instead, the organization operates on a cycle of give and take. Donations fund the loans. Borrowers repay only what they borrowed, and the money is lent out again.

“Every time we get that $100 back from a student,” Sroka explained, “that’s another $100 we can lend out to somebody else.”

JFLA is structured as a 501(c)(3) nonprofit funded by donors, grants, and philanthropic funds. Those contributions form the pool of money the organization distributes as loans.

The loans cover a wide range of needs — from education and housing to medical bills, disaster recovery, and small-business support. Borrowers apply through an online system, submitting financial information and proof of need. Applications are reviewed anonymously by a community loan committee.

Stories collected by the organization illustrate how the loans can change the course of someone’s life.

One borrower, Angelina, used a loan while completing 12-hour clinical rotations in nursing school. She graduated on the dean’s list and now works as a registered nurse specializing in cardiac and stroke care.

Another student, Ari, used a loan during graduate school to cover tuition and exam costs. Formerly in foster care, Ari went on to earn a master’s degree and a professional certification — placing her among a small percentage of foster youth who complete postgraduate education.

“These are people who just needed a little help to stay on track,” Sroka said.

Repayment typically begins within one to two months after funds are distributed and continues over 36 months. Because the loans carry no interest and require no collateral, applicants must secure a guarantor — someone who agrees to assume payments if the borrower cannot.

That requirement, Sroka said, helps protect donor funds and ensures the program can continue serving others.

Among JFLA’s most widely used programs are education loans, which help students cover tuition, books, and other expenses. Unlike most loans, student borrowers are not required to have their own income. Instead, guarantors — often parents, grandparents, or other relatives — provide the financial backing.

Repayment begins in small monthly installments that gradually increase. Students typically pay $100 per month while enrolled, followed by $250 per month for the year after graduation, and then $375 monthly until the loan is fully repaid.

“We want them to start building those healthy habits,” Sroka said. “But we don’t want to do more harm.”

Last year, JFLA distributed more than $3.4 million in zero-interest education loans, helping students pursue undergraduate degrees, graduate school, nursing programs, and vocational training.

And while education loans often attract attention, emergency loans make up the largest share of JFLA’s lending.

“These are situations where someone has a new cost that’s really going to set them behind,” Sroka said.

Medical bills, storm damage, or unexpected financial setbacks are common reasons borrowers apply.

In Santa Barbara County, where winter storms have recently caused property damage and road closures, those loans can provide an alternative to high-interest credit cards or payday lenders. Over the past several years, JFLA has distributed $177,000 in emergency loans locally, though Sroka said the program remains underused in the region.

“We’re the best-kept secret in Santa Barbara,” she said.

Although the nonprofit has been operating for more than 120 years, awareness in Santa Barbara remains relatively low. Compared with Los Angeles, where the organization originated, loan volume in Santa Barbara County is still small.

But Sroka hopes that will change as more residents learn about the program.

“Spread the word,” she said.

The organization currently has about $23 million circulating in active loans, with repayments constantly replenishing the fund.

For Sroka, that cycle reflects the same principle that inspired the program more than a century ago.

“It’s recycled money,” she said — money given in generosity, lent without profit, and returned so it can help someone else.