Is It Permissible to Take a Government-Issued Business Loan That Involves Interest?
Answered by Shaykh Muhammad Carr
Question
In today’s world, especially given the current economic situation, it is becoming increasingly difficult to find a stable job or source of income. Considering the current economic challenges, is it permissible to take a government-issued business loan for an agricultural project if the loan involves interest?
ِAnswer
In the Name of Allah, the Most Merciful and Compassionate.
I pray you are in good faith and health. May Allah reward you for ensuring your business funding is permissible.
Giving and receiving interest is decisively impermissible in Islam. Allah says, “O believers! Fear Allah, and give up outstanding interest if you are (true) believers. If you do not, then beware of a war with Allah and His Messenger! But if you repent, you may retain your principal—neither inflicting nor suffering harm.” [Quran, 2:278-279]
Jabir (Allah be pleased with him) reported that the Messenger of Allah (Allah bless him and give him peace) cursed the one who consumes usury, the one who pays it, the one who writes it down, and the two who witness it, and he said: “They are all equal.” [Muslim]
It is not permissible for a Muslim to take out a loan with interest unless absolutely necessary (darura). Financing a business is not considered a necessity.
Delay in Sustenance
The Prophet (Allah bless him and grant him peace) said, “Indeed, Jibril has inspired in my heart that no soul will die until it has completed its provision and its appointed time. So pursue (your livelihood) in a dignified manner, and do not let the delay in provision lead you to seek it through disobedience to Allah—for what is with Allah can only be attained through obedience to Him.” [Mundhiri, Targhib wa al-Tarhib]
And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani
Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life.
In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.
