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ISLAMIC BUSINESS LOAN WITH NO RIBA

ISLAMIC BUSINESS LOAN WITH NO RIBA

What is a Halal business loan with no interests (Riba)

An Islamic Business Loan with No Riba is a financing solution for entrepreneurs and companies structured under Sharia principles, which prohibit Riba (interest); its goal is to provide businesses with the capital they need while ensuring all financial dealings remain compliant with Islamic law.

For Muslim entrepreneurs, having access to interest-free business loans is vital. It allows them to finance growth, purchase equipment, or expand operations without violating their faith. It also ensures that their businesses remain halal in structure, reinforcing trust among Muslim consumers and investors.

What types (products) of Islamic business loans without interest are available ?

Here’s a clear list of the main types of Islamic business loans without interest (Riba-free) and how they work:

✅ Types of Islamic Business Loans (No Riba)

  1. Murabaha (Cost-Plus Financing)
    • The bank buys goods, raw materials, or equipment for the business.
    • It then sells them back at a markup, payable in instalments.
    • Commonly used for trade and working capital.
  2. Ijara (Leasing / Lease-to-Own)
    • The bank purchases an asset (e.g., machinery, office space, vehicles).
    • The business leases it and pays rent instead of interest.
    • Ownership may transfer at the end of the lease.
  3. Mudarabah (Profit-Sharing Partnership)
    • The bank provides the capital, and the entrepreneur provides the business expertise.
    • Profits are shared based on a pre-agreed ratio.
    • Losses are borne by the capital provider unless due to negligence.
  4. Musharakah (Joint Partnership)
    • Both the bank and the entrepreneur invest in the business.
    • Profits and losses are shared according to each party’s share.
    • Diminishing Musharakah allows the business to gradually buy out the bank’s share.
  5. Salam (Forward Sale)
    • The bank pays in advance for goods that the business agrees to deliver later.
    • Often used in agriculture or manufacturing to finance production.
  6. Istisna (Construction / Manufacturing Contract)
    • A contract where the bank finances the construction or production of an asset.
    • The business delivers the finished product at a later date.
    • Useful for project finance and infrastructure.
  7. Qard Hasan (Benevolent Loan)
    • A true interest-free loan extended for social or business needs.
    • The borrower repays only the principal, with no markup.
    • Often limited in size and provided by charitable or community funds.

WHICH BANKS WORLDWIDE ARE OFFERING ISLAMIC BUSINESS LOANS WITH NO RIBA ?

Here’s a refined and sourced list of banks worldwide offering Islamic (Sharia-compliant, no Riba) business financing, specifically in the UAE, Saudi Arabia, UK, Malaysia, Indonesia, and India, each with links to their relevant business finance pages:

UAE – DUBAI

  • Dubai Islamic Bank – Offers “Al Islami Business Finance,” a Sharia-compliant term-financing facility suitable for businesses using models like Ijara and Shirkatul Melk.
    Dubai Islamic Bank
  • Emirates Islamic – A full-service Sharia-compliant bank based in Dubai, offering business banking services alongside wealth and personal products.
  • Mawarid Finance – A private PJSC in Dubai providing a wide range of Sharia-compliant services to SMEs, including Murabaha, Ijara, Musharakah, Istisna, Wakala, and trade finance.

Saudi Arabia

  • Al Rajhi Bank – One of the largest Islamic banks globally, offering Sharia-compliant business financing using murabaha contracts and other Islamic structures.
    مصرف الراجحي

United Kingdom (UK)

  • Al Rayan Bank – A key Sharia-compliant commercial bank in the UK offering business and commercial property finance, structured per Islamic principles.
    AlRayan Bank
  • BLME (Bank of London and The Middle East) – Offers Islamic business and commercial real estate finance as part of its Sharia-compliant banking services.

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