The Complete Guide To Islamic Loans:
What Is An Islamic Loan? Introducing Our Interest Free Islamic Loan Option
Islamic finance, or halal finance as it is also known, is a means of borrowing, lending or banking money in a way which is respectful to the principles of Sharia law.
More specifically, the fundamental principle of Islamic loans, is the avoidance of any financial activities which could be deemed either harmful (haram) or risky for the borrower. This includes the ban on riba & usury. In other words, to be Sharia Compliant, all Islamic loan providers are prohibited from charging any interest on the amount borrowed.
So, if you’re searching for an Islamic Loan to fund your business today, our interest free merchant cash advance could be the perfect solution.
What Exactly Is an Islamic Merchant Cash Advance?
A merchant cash advance, or a business cash advance as it’s also known, is a completely interest free means of financing your business. Having only been around for a few years, it’s considered a truly innovative and flexible alternative to mainstream business funding.
Your business can access anywhere from £1,000 to £500,000 in unsecured capital within as little as 24 hours, and there are absolutely no fixed repayment periods. You simply pay back the loan amount using a small, pre-agreed percentage of your future customer card sales.
As repayments aren’t fixed, the amount you pay back is perfectly in sync with your business’ performance. So, if sales happen to be a little slow one day, you don’t need to worry; the amount you repay will also be suitably smaller.
Is Your Business Eligible?
Whilst traditional business loans from the bank can be difficult to obtain, particularly if you're an SME, qualifying for Islamic business finance is far easier. To qualify for our interest free Islamic loan option, all we ask is that:
Your business is registered in the UK
You have been actively trading for at least 6 months
Your business uses a card terminal to process customer card transactions
Considering an Islamic Loan for Your Business? Why Choose Us?
According to the Office for National Statistics, in 2018 it was reported that there are now more than 3 Million Muslims currently living in the UK. Many of which are also diligent and ambitious business owners seeking Sharia Compliant Finance to grow their businesses into thriving enterprises.
As we endeavour to give all of our clients access to the fast and affordable business funding they truly deserve, we recognise that this includes offering our growing Muslim client base a funding option that perfectly aligns with their religious and cultural beliefs.
This is exactly why we’re offering you a fantastic interest free alternative to mainstream funding, with our Islamic merchant cash advance.
How Do Islamic Loans Work? What is a Murabaha Contract?
A Murabaha agreement is a form of Islamic Loan contract, in which an asset is sold for cost plus profit. It is considered both halal and Sharia compliant as it adheres to the central teachings of Islamic Law.
With a Murabaha transaction, the lender is not permitted to charge interest on the loan. Instead, the lender simply purchases an asset of the business and then sells the asset back to the business owner at a later date, along with a single additional charge.
Further still, if the client defaults on repayment, the loan provider isn’t allowed to charge any additional late fees.
This is also, exactly how our Islamic merchant cash advance works. Technically not a loan, an advance works by purchasing your predicted future card receivables. You then repay the total amount borrowed, plus a single all-inclusive fee, via your card terminal. Each day or week, a small percentage of your total customer card transactions is automatically deducted and given back to the lender as repayment.
There are no set-up fees, late charges or hidden costs. Ever.
Do Muslims Pay Interest on Islamic Loans?
No. All Islamic loan providers, including Islamic banks, are prohibited from charging any interest on the amount borrowed. This is due to the Muslim belief that money has no intrinsic value and that the exchange of money should not be for profit.
With our Islamic merchant cash advance, no interest is charged on the amount borrowed. You simply pay back the total loan amount, plus just one, all-inclusive fixed fee. Because a fixed fee is charged instead of interest, an advance is considered an acceptable form of business funding under Islamic law.
Further still, the fee that you repay is always agreed upfront with the lender, so you’ll know exactly what you have to repay from the outset and throughout. This completely minimises the risk for the borrower and ensures that there’ll be no costly surprises later down the line.
Making An Application How Do I Apply for An Islamic Loan?
Our paperless application process is designed with the busiest of business owners in mind. At SME Loans you can apply for Islamic business finance of between £1,000 - £500,000 simply by submitting a quick online application form.
There’s no need for any calls, meetings or excessive paperwork and you can apply quite simply from the comfort of your own home.
Alternatively, if you have any queries or you’d like to discuss our Islamic loan options a little further, please don’t hesitate to get in touch on 020 3475 9213.
Our dedicated support team are on hand to help and guide you through the entire process, from start to finish.