Is it permissible for a company with a halal business to borrow from individuals without interest for one year, while committing to distribute a portion of its annual profits upon repayment of the debt, and in case of loss, to repay the full amount without increase or decrease? Is it permissible for the company to disclose the expected profits before borrowing?
Source: FtawySummarized from the full answer at Ftawy · reviewed Sep 2, 2026
This transaction is impermissible because it is a loan with interest. Its rectification would be to make the sums a real loan without interest or profit for the lenders, or by having the financiers enter as true partners with a share of the profit and bearing losses proportionate to their capital. There is no harm in stating the expected profits to the partners to give them an initial idea about the partnership, but it is not permissible to fix profits and commit to them based on those expectations.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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