What is the legal ruling for a startup company that lends money and deducts a commission, expenses, risk, and profit margin upfront from the loan amount, without imposing late fees or additional claims in case of default, and the company bears the loss of bad debt?

A loan that is repaid with a stipulated increase in the contract is forbidden usury (riba) and one of the major sins, according to Ibn Abd al-Barr, who said: "Every increase in a loan, or benefit that the lender derives, is usury, even if it be a handful of fodder, and that is forbidden if it is a condition."

It is permissible for the lending entity to take actual administrative expenses on the loan without an increase. However, any increase by the lending entity to the loan amount due to risk or profit margin is not permissible and is considered forbidden usury.