Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Dear Burhan,

As-salaam u alaikum.  Hope this email finds you in good health and may the peace and blessings of Allah be upon you.  I just read your most recent response in regards to Riba for a fellow brother whose question was is it halaal or haraam to invest in a business that takes an interest bearing loan from a bank for its operational expense.  I am confused.  In your email you stated hadith and verses from the Quraan that correspond to taking Riba (interest) from people but you didn't mention anything in regards to paying interest.

I am a young man and in the process of starting a business.  However, due to lack of capital I am contemplating getting a mortgage from a bank to start my company.  I will not be taking any interest payments from the bank but I will be paying interest to the bank along with the principal amount I intend to borrow.  Can you please explain to me if the hadith and the Quraan forbid paying of interest as well.  Also, if paying of interest is forbidden then can you please explain or show me the halaal way of acquiring funds to start a business.  Thank you.

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Answer:

Is paying interest riba forbidden too

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Your Question: ….Can you please explain to me if the hadith and the Quraan forbid paying of interest as well. 

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Allah says further in the Holy Quran Chapter 2 Surah Baqarah verse 278:

O Believers!, fear Allah and give up that ‘riba’ which is still due to you, if you are true believers. But if you do not do so, then you are warned of the declaration of war against you by Allah and His Messenger!

Allah says in the Holy Quran Chapter 4 Surah Nisa verse 161:

That they took ‘riba’, although they were forbidden. And that they devoured men’s substance wrongfully. We have prepared for those among them who reject faith a grievous punishment (of Hell Fire)!

Allah Says in the Holy Quran Chapter 3 Surah Ale-Imraan verses 130-132:

130 O ye who believe! Devour not ‘riba’ doubled and multiplied; but fear Allah; that ye may (really) prosper.

131 Fear the Fire which is prepared for those who reject faith.

132 And obey Allah and the Messenger; that ye may obtain mercy.

Allah Says in the Holy Quran Chapter 30 Surah Rome verse 39:

39 That which ye lay out for ‘riba’ through the property of (other) people will have no increase with Allah: but that which ye lay out for charity seeking the Countenance of Allah (will increase): it is these who will get a recompense multiplied.

Allah Says in the Holy Quran Chapter 2 Surah Baqarah verse 276:

276 Allah will deprive ‘riba’ of all blessings, but He will give increase for deeds of charity: for He loveth not creatures ungrateful and wicked.

Al-Tirmidhi Hadith 2829 Narrated by Ali ibn AbuTalib

Ali said he heard Allah's Messenger (saws) invoke the curse of Allah on those who took ‘riba’, those who paid it, those who recorded it, and those who refused to give sadaqah.

Respected brother in Islam, although all the verses of the Glorious Quran are against the taking of ‘riba’ or interest, the Messenger of Allah (saws) time and time again forbade the believers from indulging in any aspect of ‘riba’, and invoked the curse of Allah Subhanah on those who took ‘riba’, those who paid, and even those who recorded such transactions!

Your Question: ….Also, if paying of interest is forbidden then can you please explain or show me the halaal way of acquiring funds to start a business. 

If one does not have one’s own capital to start a business, one is at liberty to use any other lawful means to raise capital….

1. One may initiate a business in partnership with an investor.
2. One may borrow funds from their family or loved ones on an interest-free basis.
3. One may approach a Shariah-compliant bank or financial institution who would lend them capital for their business according to one of their many lawful schemes. Etc.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan