Fiqh of financing 

My husband and I are in the process of opening a small furniture store. We have worked hard and save some money to own a small business that is not based on riba. We are not taking any loans. We are trying very hard to not fall into anything that will constitute riba.

In the name of Allah, Most Compassionate, Most Merciful,

If you are confident (by observation and past experience) that a particular client will pay the loan in time (within one year) and avoid being involved in Riba, then it would be permitted for you to have the independent financing company offering finance for that client.

However, if you think that the client will not be able to pay in time and avoid Riba, it will not be permitted.

If you cannot determine whether the client is able to (and will) pay in time and avoid Riba, it would be permitted to let the financing company offer him finance, although better to avoid.

The above ruling is based on the concept of being a cause for someone else’s sin. Imam Ibn Abidin (Allah have mercy on him) states:

“If one is the main cause for a sin (meaning if the cause would not have been present, there was no reason for one to sin), it will be Haram, otherwise it will be Makruh.” (Radd al-Muhtar)

And Allah knows best

Muhammad ibn Adam al-Kawthari
Darul Iftaa, Leicester, UK