Unlike a personal loan, which is typically taken and used in need, business loans are often taken with the express intent of profiting therefrom. Often, a business may choose to go in debt not because it is unable to afford a particular undertaking, rather because the cost and/or risks of taking a loan end up being more profitable than those of reallocating existing assets.

Given that a lender doesn't accept interest on the loan, and under the general principle of "Any loan which brings benefit is riba", is it permissible for the debtor to actually (try to) profit from his use of this money while the actual owner of the property gets nothing of it?

I know that it would be possible to work the transaction such that both parties can share the profit and risk thereof (e.g. musharakah); that's not what the question is about. I am only concerned about the situation where the capital is explicitly a loan.

I am particularly seeking a Hanafi position on this matter, ideally one in which full evidences are presented.

  • I would be very interested to know about this. Great question though. – Noah May 23 '13 at 17:42

You must know the difference about 2 things, Loan and debt . The both kinds have 1 common factor , interest is forbidden , however there is a big difference between the 2 kinds . First of all , the first kind is done as a good deed, to help someone out , as stated by this narrative ( من نفس عن مؤمن كربة من كرب الدنيا ,نفس الله عنه كربة من كرب يوم القيامة) and this kind has more thawab than regular sadaka , because the asker of this kind of loans is really in need of money , and most of people ( including hanafi) that in case of the first kind it isn't permitted to set a due date for payment because it's more or less , a donation. Last thing, you can not use it to generate profit . As for the second kind it's all about lending money , just a typical loan from a bank to fund a new business , but without the interest , you can use it to generate income , a due date is determined in the contract . Even if the money generated income unless it's a musharakah , the lender doesn't have any right to have a % of the profit . As for your question , Hanafi and Malyk and shafeey and Hanbaly all agree. Resource: Book of (feqh el sona) by el sayed sabyk ( a textbook about sona sold about 10 million copies)and "جامع المقاصد فى شرح القواعد"

  • pardon me for my bad english – Abdelrahman Esmat May 24 '13 at 20:05
  • To my understanding, عارية is only for non-fungible goods that are returned exactly in kind, which would not apply to cash loans which are consumed. Can you quote references that cash is actually treated as an عارية good? – goldPseudo May 29 '13 at 15:18
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    tried to -1 my answer but i couldn't :P , you're right if the عارية is money then it's called دين – Abdelrahman Esmat May 29 '13 at 17:00
  • same answer though, i just changed the names – Abdelrahman Esmat May 29 '13 at 17:01

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