The Alternative Finance Program respects Islamic law by offering fixed-rate loans.
Published: 03/24/2010
Katherine Lymn klymn@mndaily.com
An Islamic law enacted centuries ago was an obstacle for modern Minneapolis businesses until Minneapolis partnered with an African business resource group to allow Muslim business owners a way to both comply with their beliefs and invest in their businesses.
Since April 2007, the city of Minneapolis, in partnership with the African Development Center, has given out 38 loans in a way that is compliant to Islamic law by using a fixed rate in place of a variable interest rate.
Through the system, called the Alternative Finance Program, businesses pay a set rate of return, which corresponds with Islamic practices. The program is a slightly altered version of the common “Two-Percent” loans also offered by the city’s Department of Community Planning and Economic Development.
“It really amounts to the same thing,” Bob Lind, CPED director of business finance, said. “But it’s … just a different way of looking at it.”
Recipients of the loan operate businesses that lie mainly in the Cedar-Riverside neighborhood and along Lake Street, “typical strongholds for the Somali community,” Lind said.
Five of the loans went to businesses that are part of a Somali marketplace in the Cedar-Riverside area.
Said Karie, who works at Hijaz Clothing in the marketplace, explained that “everything that has [an] interest rate is actually a sin” for Muslims.
“It’s been that way for years and years,” Karie said.
The rule extends beyond just loans, as Muslims who follow the religion strictly will go as far as returning interest gained on savings to the bank or a charity, said Abdirahman Omar, general manager of Mustaqbal Computer Center. [more]
The Islamic Workplace 
Posted on March 25, 2010
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