Minneapolis Helps Muslim Businesses Follow Sharia Law

Nick Sudheimer, MN Daily, February 7, 2012

In 2005, Afrik Grocery and Halal Meat on Cedar Avenue needed to expand. Owner Abdi Adem, who operates his business under Sharia law, needed to find a loan that funded the expansion and complied with his religious beliefs.

Finding the loan was easier than he expected.

Since December 2006, the city of Minneapolis, in partnership with the African Development Center, has given out 54 loans in a way that is compliant with Islamic law by using a fixed rate in place of a variable interest rate, which some considered sinful.

Instead of charging interest, the city and the ADC estimate how long it will take the business to pay off the loan and totals what the interest would be. That amount is added as a lump sum to the total cost of the loan.

“It feels like, looks like and acts like a loan, but it’s just a different way of looking at it,” said Hussein Samatar, executive director of the ADC.

Abdulwahid Qalinle, an adjunct associate professor of Islamic law at the University of Minnesota, said interest rates can be considered sinful under Sharia law.

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Through the Alternative Financing Program, small lenders—usually the ADC—will offer a loan and the city will match it up to $50,000. Business owners will then pay back the lender and the city.

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Shaw added that although the loans are targeted toward Muslims, any business owner can apply for a similar loan with an interest rate that has a similar effect as the Sharia law loans. {snip}

Of the 54 loans the city and the ADC has given, only one has gone into default.

According to a 2009 report from the Small Business Administration, the national default rates are around 12 percent.

“This really, truly has been one of the phenomenal success stories of Minneapolis,” Samatar said.

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