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New program was highlighted at Saturday event for new American and immigrant-owned businesses offering Sharia Compliant Lending options for small business loans.
LOUISVILLE, KY (RIOT) – The Metropolitan Business Development Corporation (METCO), Louisville Metro's small business loan program will now offer a Sharia-compliant modification option that aims to expand access to its loan products for Muslim business owners and entrepreneurs who would otherwise be prohibited by their religious beliefs from accessing the city’s low-interest business loans.
For those who may be unaware Sharia Law prohibits riba, or usury, defined as interest paid on all loans of money (although some Muslims dispute whether there is a consensus that interest is equivalent to riba). Investment in businesses that provide goods or services considered contrary to Islamic principles (e.g. pork or alcohol) is also haram ("sinful and prohibited").
“This modification will open a pathway to capital for a subset of business owners who were previously left out of traditional banking, creating more stability for the businesses and helping them to grow, which in turn benefits our broader local economy,” said Amos Izerimana, Director of the Office for Immigrant Affairs. “The modification also recognizes our city’s diversity of beliefs and serves to offer every Louisvillian equitable access to city services and programs.”
The METCO Board approved the modification option at its June meeting, and the change was highlighted Saturday during the REACH Small Business Celebration and Networking at Louisville Central Community Center. The REACH program, which wrapped up its inaugural year on Saturday, included a series of workshops for new American and immigrant-owned businesses impacted by COVID to help them strengthen their businesses.
“To be a truly welcoming and inclusive community, we must ensure that every Louisvillian has the same ability to access information, services and programs offered by the city – whether that be translating information in different languages or providing this new Sharia-compliant modification,” said Benjamin Moore, Director of the Department of Economic Development. “Muslim business owners that follow Sharia Law have historically been excluded from METCO lending because METCO loans charge interest, a financial practice inconsistent with Sharia Law. With this approved modification, we are happy to say that we have reached a more equitable solution.”
The optional modification will charge a loan service fee in lieu of interest. The fee is based on the amount of interest that METCO would anticipate earning over the life of the loan. Fees will never be less than the interest anticipated to be earned. If the loan is paid off early, the loan service fee must still be paid in full.
To learn more about the city’s METCO loan programs, visit https://louisvilleky.gov/government/economic-development/metco-loan-programs .
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