Is it permissible for a person who does not possess money to borrow from an interest-based bank for the purpose of constructing a commercial building after being unable to obtain an istisna'a (manufacturing/construction finance) from Islamic banks, especially given that the governmental body which used to fund such projects has referred him to this interest-based bank?

Transactions with interest-based banks usually involve forbidden conditions, such as late payment penalties and commercial insurance. If the transaction is usurious, it is not permissible to deal with the bank, and the referral by government entities does not justify engaging in usury. Dealing with interest-based banks is only permissible out of necessity, which is to be estimated in its true measure. Building a commercial building is not a necessity that permits dealing with usury, as other means can be used instead. This is because dealing with them entails assisting in sin and transgression, and Allah Almighty has said: "And cooperate in righteousness and piety, but do not cooperate in sin and aggression." And whoever abandons something for the sake of Allah, Allah will compensate him with something better than it. And "And whoever fears Allah - He will make for him a way out And will provide for him from where he does not expect."