The interest-free lender is a lifeline for mainly Shia Muslim communities battling a years-long financial crisis that has locked Lebanese out of their bank deposits.

The Israeli military on Monday struck several of the firm's branches in Beirut's southern suburbs, where Hezbollah holds sway.

An Israeli army Arabic-language spokesperson called it "a central element in financing Hezbollah's terrorist activities".

Al-Qard al-Hassan is also facing US sanctions as Washington pushes to cut off Hezbollah's funding sources while pressing the Lebanese government to disarm the group.

The United States has gone as far as calling for the firm to be shut down.

In February, Washington announced new sanctions against the gold exchange Jood SARL, which it said was a part of Al-Qard al-Hassan.

A Lebanese official told AFP that during a US Treasury official's visit to Lebanon in November, he demanded that authorities "counter money laundering, the cash economy and close Al-Qard al-Hassan".

Hezbollah relies heavily on cash infusions, sometimes transported via commercial flights, according to experts.

- Popularity -

Under US pressure, Beirut has taken measures to restrict Al-Qard al-Hassan's work.

In July, Lebanon's central bank banned all dealings with the firm.

It remains, however, very popular in a country where a seven-year economic crisis has driven many to desperation.

The financial firm, officially registered as a charity, has been offering customers credit in exchange for gold deposits on an interest-free basis since the 1980s.

It provides micro-loans to small businesses, workers and medium-sized agricultural or industrial enterprises.

In recent years it has broadened its activities, even offering loans for solar panels, in a country plagued by long power cuts.

Al-Qard al-Hassan says it has more than 30 branches nationwide, mainly in Hezbollah bastions, but also in central Beirut and other major cities such as Sidon and Tyre.

In 2020 and 2021, when the economic crash prevented Lebanese banks from providing loans, Al-Qard al-Hassan said it had granted 212,000 loans worth $553 million "despite the crisis".

During the last war between Hezbollah and Israel between October 2023 to November 2024, its branches across Lebanon were targeted by air strikes. Some branches have been rebuilt since.

Al-Qard al-Hassan is part of a network of associations, schools, hospitals and cooperatives serving Hezbollah supporters, which helped to establish its popularity within the Shia community that forms the bulk of its clientele.

However, clients from the Christian and Sunni Muslim communities have also previously told AFP that they have used its services.

While Iran helped establish the organisation in its early years, it is now entirely self-funded, according to experts.

Hezbollah critics condemn the institution for evading banking sector regulations and controls.

In 2007, the US Treasury froze the institution's assets, and in 2021 imposed new sanctions against several figures linked to it.

Washington accuses Hezbollah of using the firm as a cover to mask its financial activities and gain access to the international financial system.