Loan service fees, late payment fees, collection fees : financing small start-up businesses

السؤال

[Question one] : Assalamu `Alaikum, Dr. Kahf I am interested in learning about the Islamic way of financing small start-up businesses. Would you please direct me to any references on this subject ? Jazaka Allahu Khairan, and Ramadan Kareem ! [Question two] : Jazaka Allahu Khairan-In Sha Allah I will look up these names and their works. (As for being critical, I don't know that I currently have the tools to be critical in this area--I am so thirsty for knowledge about the practical side--the actual workings--of Islamic economics that I will probably trust any authoritative reference at this point ; that is why I am so grateful for your pointing out specific names to look up.) 1. Part of the reason for my question was that I currently work for a non-profit organization, Neighborhood Development Center (which has a continuum of programs for low-income aspiring entrepreneurs, from writing a business plan, through obtaining a small business loan and getting business, legal, and technical assistance, to establishing their start-up business in a business "incubator"--usually an old building that has been renovated for this purpose within a historically "underserved" neighborhood) and we do offer a "Riba free" financing alternative (as part of our loan program). However, this consists mostly of a "buy-sell agreement," where a grocery owner needs a new walk-in freezer, for example, and we would purchase it for, say, $ 5000 and resell it to him with a 10 % profit (and he would be able to pay for it over time). Of course, we do get into long explanations with our (mostly) Somali entrepreneurs when the amount they have to pay exceeds $ 5500.... But that is another discussion. I was trying to find out if there are other practical Islamic financing options for small businesses, beyond the "buy-sell agreement." Small businesses, of course, need start-up working capital or need to have a space remodeled or electrically rewired or upgraded (plumbing, for instance)--all beyond the scope of a straightforward buy-sell scenario. Are there institutional "good loans" in Islamic financing, and, if so, how does the institution make a legal profit ? Or if 10 Muslims came together and invested $ 5000 each in a small start-up business, what kind of contract would regulate their contributions over time (whether they are working or non-working partners) and for what time limit ? These are the types of questions I am trying to answer, as well as become educated in alternatives I have never even considered, but that, I am sure, have been successfully developed and applied over our 1400 year history. 2. Briefly about me (I usually don't like to do this, but I feel this would give you a better picture of where I'm coming from--no pun intended :)). Alhamdulillah, Allah SWT guided me to Islam 23 years ago--the best thing that ever happened to me. My grandparents came from Syria and Lebanon and settled in Egypt many years ago ; they were mostly Greek catholic and Greek orthodox. I was baptized in the Roman Catholic Church (to avoid any conflict between the two previously mentioned churches). I went to a French Jesuits school in Cairo, where I got an excellent basic education (but argued my way out of religion class at age 16 and out of any kind of formal religious practice--Catholicism did not answer any of my "important" teenage questions), then to the American University in Cairo, where, after studying physics and mathematics for two years, I finally obtained a degree in English and comparative literature (French and Arabic). After college, I worked in Kuwait from '78 to '85, then went back to Cairo for a year, where I met the lady who would become my wife, got reintroduced to Islam (seriously this time) ; we came to the United States in 1986, I became a Muslim--Alhamdulillah--and we got married. Today, both my wife, Magda, and I are quite active--Alhamdulillah--in educating non-Muslims about Islam. I'm 56, but I have so much more to learn and teach, InShaAllah. 3. Dear Dr. Kahf, I have come to realize in the last few years what an "oppressive" financial system the world has been living in. And I know in my heart (if not through direct practical knowledge at this point) that Islam does provide solutions to remove such oppression. The time is so ripe, right now, for an Islamic financial alternative that will replace oppression with justice and equity. How great a Da`Wah boost that would be if we could provide relief from what oppresses people most in this and other countries--debt that results from interest ! And it does not need to start on a grand scale ; it can start with a simple program of true interest-free financing of small startup businesses at the neighborhood level--a sort of modular program that can be replicated locally anywhere ! I know I may be dreaming, but I am so passionate about finally applying what we have been given in the Qur'an by our lord and creator SWT for our benefit and success in this world and in the hereafter. Forgive me for a longer letter, but it is not every day that an ordinary person like me can communicate directly with a real scholar. And for translating Dr. al-Qaradawi's wonderful book about Zakah you have, Dr. Kahf, my highest respect. May Allah SWT increase us in knowledge and guide us to the deeds that HE SWT approves of and accepts--Ameen. Respectfully, Samir PS. I wish Dr. al-Qaradawi would update one of his older books : مشكلة الفقر و كيف عالجها الإسلام ; it is also so much needed today !

جواب الفتوى

أنقر هنالمشاهدة هذا المحتوى

تاريخ النشر

2010-09-06

التخصصات الرئيسية

العلوم المالية و المحاسبية
الدراسات الإسلامية

الموضوعات

• الفقه الإسلامي
• الإسلام
• التمويل
• الشركات الصغيرة

عدد الصفحات

4

نوع البيانات

فتاوى

لغة النص

الإنجليزية

رقم السجل

BIM-729943

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