Friday, August 19, 2022 - 21 Muharram 1444

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State loans for young entrepreneurs

The State grants loans to young graduates so they can establish their own projects instead of offering them employment.
What is the religious opinion concerning this matter?
What should these youth do if this is their only solution?

Answer

Loans that the State grants young graduates for establishing projects are, in fact, investments through which the youth engage in business using the State’s money, with the intent of profit and growth. This is the case when the State does not buy physical assets for the proprietor. If, however, these contracts are simply transactions where the State buys some of the physical assets for the proprietor and then sells them to him in instalments for a greater price, then they are a form of permissible for-profit trade.
And Allah Most High knows best.