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Current Stimulus Package for Small business in-light of Quran & Sunnah

Answered as per Hanafi Fiqh by ShariahBoard.org

The U.S. government announced a large stimulus package because of the recession that resulted from the COVID-19 outbreak. Part of this package comes in the form of loans for small businesses and are intended to keep the business viable, with low interest rates, and with forgiveness of the principal debt, not the interest, on the condition that the business owner uses the loan to pay specific essential business expenses such as rent, utilities, and the wages and salaries of employees – and does not lay them off. The question here is whether, in light of this crisis, Muslim business owners can apply for those loans?

الجواب وباللہ التوفیق

Per your description, the government after giving out the stimulus package, forgives that debt but instead charges interest on it. If the amount of interest is less than the principle amount, it is acceptable to benefit from that scheme.

That’s because, even though in the government’s pretext that amount is interest, but under legal Islamic terms, that falls in the circle of loan or debt.

But if the amount of interest is more than the principle amount, it will be regarded as taking an interest based loan, which must be avoided.

فقط واللہ اعلم بالصواب    

This answer was collected from Shariahboard.org. It was established under the supervision of the eminent faqih of our era, Hazrat Shah Mufti Mohammed Navalur Rahman damat barakatuhum.

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