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“What if the payment is meant to cover depreciation or general overhead?” asked Mr. Isaacs. “For example, people who don’t pay, cloth diapers that get worn out or are not returned, purchase of additional outfits, etc.”

“Direct, actual depreciation might still be considered covering loss,” replied Rabbi Dayan. “However, if the charge is beyond the actual expenses or depreciation, even slightly, then the borrower would be considered a socher. The gain from this particular loan is profit to cover the losses from elsewhere. In this case, the user would not be liable for oness, unless he wanted to pay of his own volition. However, the gemach can stipulate in their rules and regulations that that the user always accept the greater liability of a sho’el.”

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Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, headed by HaRav Chaim Kohn, a noted dayan. To receive BHI’s free newsletter, Business Weekly, send an e-mail to [email protected]. For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, call the confidential hotline at 877-845-8455 or e-mail [email protected].