There are some people who are careful to separate ma’aser (a tenth) of their money they receive from the earnings they accrue but they do not separate anything from the capital of the money they possess. This is not the proper way of fulfilling this mitzvah. Rather, first it is necessary to separate a tenth of the capital, and then when the Holy One sends him profit, he should separate from that as well.
And since the Yetzer Ha-ra for money is overwhelming for people, it is a good idea to use the ma’aser money from the capital to make it into a gemach (free-loan fund) to lend money to the poor. [This will help reduce the person’s resistance to taking ma’aser because] according to some Rishonim (Early Authorities) this money is considered the person’s own money with regard to certain matters, and he will be allowed to lend himself from that fund — provided that he will see to it to borrow money from others should a poor person in dire straits come to him. That is, he would borrow from others up to the amount that he used from the fund he set up, and, in turn, he will lend that amount to the poor person. However, according to some of the Rishonim it is proper to explicitly make a condition from the outset that he is separating the money with the intention that it may be used for extending loans, and not only for tzedakah which will be given away as charity. Alternatively, he can separate the whole sum for tzedakah but in the meantime, before he disburses it, he can lend the money to those people who need a loan, and then, when the poor come his way, he will give away the sums outright.