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I am going to start a new business with my friend both have agreed to invest 50% amount by each and to share the profit in the same percentage. My share of investment is ready, but my friend is borrowing money from bank to invest into the business on his own risk. As per our agreement my friend will be solely responsible to return the loan amount and our business will not be liable at all for this loan amount. Could you please suggest me if I can enter into this business with him?

Answered according to Hanafi Fiqh by Darulifta-Deoband.com

I am going to start a new business with my friend both have agreed to invest 50% amount by each and to share the profit in the same percentage. My share of investment is ready, but my friend is borrowing money from bank to invest into the business on his own risk. As per our agreement my friend will be solely responsible to return the loan amount and our business will not be liable at all for this loan amount. Could you please suggest me if I can enter into this business with him?

Answer

(Fatwa: 766/739/N=1433)

It is unlawful and haram to take interest based loan from the bank for business. It is necessary to avoid it in any case, so you should stop your friend from it. But if he has already taken the interest based loan from the bank then since the amount of the loan is not haram rather the haram act is to give interest and do interest based dealing; hence it shall be lawful to make your friend partner in the business with this amount. However it is far better and desired to save oneself from it and to start the business in the partnership of a person who has interest free loan.

Allah (Subhana Wa Ta’ala) knows Best

Darul Ifta,
Darul Uloom Deoband

This answer was collected from the official ifta website of Darul Uloom Deoband in India.

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