What is the ruling on financing an investment fund for startups through a loan to be repaid within 3 to 5 years, in exchange for the fund entering as a partner in the company with an agreed-upon percentage, and remaining a partner after the debt is repaid, and in the event of project failure, the lender is not obliged to pay back his debt?
Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 2026
This form of financing is a usurious and forbidden loan, because it combines the repayment of the loan with an increased share for the fund. Any loan in which an increase is stipulated is forbidden by consensus, as mentioned by Ibn Qudamah, Ibn al-Mundhir, Ibn Abd al-Barr, Sheikh al-Islam Ibn Taymiyyah, and al-Shawkani.
Summarized from the full answer at Ftawy · imported
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