Answered by Shaykh Faraz A. Khan
Question: I would like to use some of my zakat money for a charitable loan with the intention of whatever is returned will be given to someone else. Is it ok?
Answer: Assalamu alaikum wa rahmatullah,
I pray this finds you in the best of health and states.
One cannot give out a loan from one’s zakat money, as it will not count as zakat. One could do so from one’s remaining wealth, as regular charity (sadaqa).
Zakat is defined as “granting ownership of a certain amount of wealth [2.5%], upon which one lunar year has passed, to a deserving recipient.”
As such, it is valid only if ‘ownership is granted’ to the individual…if it is given as a loan and then taken back, then it would not fulfill one’s zakat.
[Ibn Abidin, Radd al-Muhtar; Tahtawi/Shurunbulali, Hashiyat al-Tahtawi ala Maraqi Falah]
And Allah knows best.
Checked & Approved by Faraz Rabbani