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Can one accept a loan in lieu of the loan amount and 20% of the business?

Nasihah (Advice): Help your workers in their work

 

Sayyiduna Sallaam Bin Amr Radhiyallahu Anhu reports from one of the companions of Nabi Sallallahu Alayhi Wasallam that he said: “Your slaves are your brothers, so treat them well. Ask for their help in what is too much for you and help them in what is too much for them.” (Adabul Mufrad)

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Question and Answer:

 

  1. A businessman approached me to offer me a loan to start up my business after my shop was looted. He also asked for a 20% shareholding in my business. Can I accept the loan and give him a 20% shareholding in my business?

 

(Question published as received)

 

  1. In principle, it is not permissible to derive any benefit from a loan, as it is tantamount to interest (Riba).

Thus, in the enquired situation, if the businessman intends to offer you a loan to start up your business, he cannot ask for a 20% shareholding in your business. He will only be entitled to the repayment of the principle amount of the loan, as asking for any amount over and above the loan amount would be tantamount to interest (Riba).

 

If the businessman is interested in deriving benefit from your business, then you may offer him a shareholding in your business by entering into a partnership, without the condition of a loan. He may then purchase a stipulated percentage of your business and accordingly become a partner, who will share in the business’s profits and losses as per the percentage of his shareholding. (Al-Ikhtiyaar Li-Ta’leelil Mukhtaar 2/33)

 

And Allah Ta’ala Knows Best

Mufti Ismaeel Bassa

Mufti Moosa Salie

(The answer hereby given is specifically based on the question asked and should be read together with the question asked. Islamic rulings on this Q&A newsletter are answered in accordance to the Hanafi Fiqh unless otherwise stated.) 

 

Fatwa Department
Jamiatul Ulama (KZN) 

Council of Muslim Theologians
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Durban, South Africa
Tel : +27 (0) 31 2077099

Email: fatwa@jamiat.org.za
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Website : www.jamiat.org.za

 

 

 

 

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