I have a business and I need to make an extension. Is it permissible to take a bank loan?
Question
I have a business and I need to make an extension. Is it permissible to take a bank loan?
Answer
In Shari'ah (Islamic law), it is permissible and there is no objection to engaging in this contract on the following conditions:
- If it is a contract to finance an investment based on feasibility studies and investment accounts.
- The contract is void of risk and harm.
- The contract achieves the best interest of all the parties involved.
In this case, this kind of contracts must not be designated as a "loan" to avoid misconception and mixing it with the legal maxim that says, "Each loan which brings benefit is deemed usury". Loans are classified from among non-profit contracts, while finance contracts are deemed from among exchange contracts.