The Islamic small business financing model is based upon the shari’a principle of Musharaka or shared ownership. Faith Fund will establish a joint business venture with qualified clients in which Faith Fund provides the capital requested for operating a business activity. The client contributes to this joint business venture by providing project execution, asset management, and product marketing skills that are necessary for the success of the business. Though the client is responsible for running the business as he deems fit, certain decisions having significant impact on the business must be taken in concert with Faith Fund as a co-owner.

Faith Fund and the client share the profits that result from the business according to a rate that both parties must agree upon beforehand. The client also agrees to buy back Faith Fund’s share in the business by making fixed monthly payments that will allow him to become the sole owner of the business over a certain period of time.

Conditions of Financing

The joint business venture may involve the production, sale, and delivery of tangible or intangible goods. Faith Fund assumes that the Muslim client will embark only in activities that are entirely permissible under the principles of Islam. If necessary, Faith Fund can seek a scholarly opinion from its shari’a Advisory Committee to determine legality.