Business Question: Is the Government business bounce bank loan halal or haram?

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. I wanted to enquire regarding the the government bounce back loans for businesses, whether they are halal. They are interest-free for the first 12 months as the govt have said they will pay interest on them for the first 12 months, after which business will have to repay including interest. If a business takes the loan and pays it back within 12 months would it be halal?

So, this weak soul has also studied Alhamdulillah, but I just wanted to seek your opinion on this question I recieved. My current thoughts are that it would be problematic as a business is not able to ‘opt out’ after the 12 months so in essence the interest after the 12 months is certain & known & thus should be avoided etc? Any thoughts appreciated. BarakAllahu Feekum!

Wa alaykum salaam,

My thoughts are that the loan is not Shariah compliant and that this should not be an option unless an absolute necessity. Kindly see this post for more information on when a business can potentially consider such options:

The reason why it’s an issue is that you are entering an interest-based loan from the outset, and the government is assuming the responsibility to repay the interest. As the counter-party to the transaction, you are somewhat doing a hawalah and debt transfer of the interest payable to the government who are then paying on your behalf. So the first 12 months are paid by Hawalah and the after that, you are paying off as the debtor.

Allah knows best

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