The Chancellor Rishi Sunak announced a cash and tax-break measure today amounting to 15% of the UK\u2019s GDP. It is a massive and unprecedented move to try to stave off as much as possible the economic effects of coronavirus.<\/p>\n
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In this article we:<\/p>\n
(For all our coronavirus-related personal finance articles please see here<\/a>.)<\/p>\n Starting with the biggest policies first, the Chancellor announced:<\/p>\n A number of hajj and umrah and travel businesses have undoubtedly struggled during this period, as have restaurants and Muslim clothing retailers. For them provisions 1(b), 2, 3 and 4 will be welcome.<\/p>\n For all of us with houses, (5) will be a relief \u2013 though it remains to be seen whether this also applies to Islamic banks. We fully expect that it does, but are confirming with them on this.<\/p>\n Unfortunately there isn\u2019t much support for startups in the Chancellor\u2019s package, but we may see that in the days to come.<\/p>\n Loans are haram and should be avoided in all but the direst of situations. Taking interest is as haram as eating pork is.<\/p>\n But given the circumstances we find ourselves in, for some businesses the direst of situations could well be a reality in the coming weeks and for them taking an interest-bearing loan could become permissible.<\/p>\n We expect that, given self-isolation measures are expected to continue for a number of months, businesses that are based entirely on people coming to them and spending time on their premises, will be quickly brought to the brink.<\/p>\n Here are some indicators:<\/p>\n Here are some indicators of when a business should not resort to taking a haram loan:<\/p>\n If a business resorts to taking an interest-bearing loan it must only do so to the amount it needs to survive. Once it has returned to even keel the prohibition will apply once more.<\/p>\n A Muslim-owned business should also not take out a loan to then fund its haram activities (e.g. some restaurants sell alcohol) \u2013 it should only seek (like at any time) to do halal activities. We are strongly of the opinion that there are enough halal opportunities today to not have to resort to haram ones.<\/p>\n If your business is in a dire situation, as defined above, then Mufti Faraz Adam and Mufti Billal Omarjee agree that it temporarily becomes permissible for you to avail of the government Coronavirus Business Interruption Loan Scheme. However you must have exhausted all other means available to you, such as raising equity financing, obtaining grants, obtaining interest-free credit (and paying off the money within the interest-free period) before you decide to go for the loan option.<\/p>\n Given the severity of the prohibition of interest in the Qur\u2019an, it is worth reiterating here that such a temporary fatwa is only applicable in these extraordinary times.<\/p>\n If you are unsure if the fatwa applies to your particular business, then please do consult a scholar you trust.<\/p>\n We at IFG will be picking up with the British Business Bank to see if we can convince them to offer a sharia-compliant lending solution to Muslim SMEs, but given the enormous amount of work the BBB is busy with right now, we are not hugely optimistic. In light of that, we have worked with our Mufti advisors to set out when the governmental loan scheme becomes a permissible option for Muslims businesses.<\/p>\n","protected":false},"excerpt":{"rendered":" The Chancellor Rishi Sunak announced a cash and tax-break measure today amounting to 15% of the UK\u2019s GDP. It is a massive and unprecedented move to try to stave off as much as possible the economic effects of coronavirus.<\/p>\n","protected":false},"author":24,"featured_media":6571,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","wds_primary_category":0},"categories":[5,23,8],"tags":[33],"acf":[],"_links":{"self":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/6570"}],"collection":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/comments?post=6570"}],"version-history":[{"count":0,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/posts\/6570\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media\/6571"}],"wp:attachment":[{"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/media?parent=6570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/categories?post=6570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.islamicfinanceguru.com\/wp-json\/wp\/v2\/tags?post=6570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What did the Chancellor announce?<\/h2>\n
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Changes relevant to Muslims businesses<\/h2>\n
But hang on, aren\u2019t loans haram?<\/h2>\n
Fatwa<\/h3>\n
So what is a \u201cdire\u201d situation?<\/h3>\n
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Conclusion<\/h2>\n