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Yes, There is Usury in USA Islamic Business Loans

MUSLIMCREED There has been discussions about if there are or are not any businesses that offer Islamic business loans that have interest in them. The short answer to this question is no, the long answer will be discussed below. First let’s cover the long answer and then we will move on to the short answer. There may be some businesses that claim they offer Islamic business loans but they are in violation of some of the tenets of Sharia law, so they do not offer Islamic business loans, which means there are still businesses that do offer Islamic business loans even if they may be few and far between.

What is Usury?

Usury is the practice of making loans with very high rates of interest. This type of lending has been around for centuries and has been a well-known concept. It's common to hear people say that usury is only found in the Muslim community, but this isn't true. In fact, usury can be found anywhere there are loans being made with high rates of interest. A loan shark is an example of someone who practices usury because they charge very high rates of interest on small loans. The legality of these types of loans varies by country, so make sure you research what the legal status is before getting involved with any transactions involving business loans or anything else where money could be lost through the practice of usury.

Is There Usury in USA Islamic Business Loans?

There are many misconceptions about Islamic banking and finance. One of the most common misconceptions is that there's no such thing as a loan with interest in Islam. This couldn't be further from the truth. In fact, there are various types of loans within Islam that involve some form of interest--the only difference being that rather than paying interest to a bank or other type of financial institution, you pay it to either another individual or yourself. Usury is lending money at an excessive rate of interest; so if you're earning 5% per year on your investment and somebody offers to give you 10% per year, they're engaging in usury. Ijara (leasing) involves borrowing a certain amount of money and repaying it after one fixed period of time, often with some level of profit going to the lender. For example, you might borrow $10,000 for three years while agreeing to return $11,000 at the end of those three years.

The Different Types of Usury

Usury means to charge excessive interest on a loan. The word usury comes from the Latin word usuria which translates to excessive interest. Interest rates may be considered usurious if they are higher than what's typically charged on a loan. 

For example, charging 30% interest per year would qualify as usurious. An alternate definition of usury can also refer to the practice of lending money at excessively high rates of interest. In that case, any rate over 36% could be seen as usurious. The real question is whether Islam allows for these types of loans or not. It depends on who you ask and their interpretation of Islam. Those who forbid these loans believe that there should never be an interest-based transaction under any circumstances because it will result in unfairness and exploitation for one party by another. Conversely, those who do allow for this type of transaction believe it should only be allowed with the hope that both parties will benefit from it without one side being exploited or taken advantage of.

How to Avoid Usury

There are several ways to avoid usury. One way is for the borrower to make it a condition of the loan that he will not have to repay more than the principal plus agreed-upon interest. The lender may agree because such a condition makes it more likely that the loan will be repaid since there will be no outstanding balance and therefore no additional interest. Another way for the borrower to avoid usury is by having a fixed rate of interest. In this type of agreement, the borrower agrees with the lender on an interest rate at which they can borrow money. So if at any point during the term of the loan, rates rise above what was initially agreed upon between both parties then there will not be an increase in interest.


There are certain Islamic guidelines that must be followed when financing a business. One of these guidelines is the prohibition on collecting interest or usury. If you are looking for a usury-free loan to finance your business ideas, there are many options available to you. You may choose to borrow from family and friends, get an equity investment from someone who believes in your idea, take out a home equity line of credit, or use a crowdfunding platform such as Kickstarter. All of these methods allow for loans without interest.

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