1. There is no specific small business category that is necessarily recommended, but businesses that promote a positive impact on society may be viewed favorably from an Islamic standpoint. It is important to ensure that the business does not involve anything harām (prohibited), such as dealing in alcohol, gambling, or ribā (interest).

2. Seller financing can be permissible if it avoids ribā. Interest-bearing loans are forbidden, but structured payments with clear terms and no interest are allowed. A possible solution is a murābaḥa (cost-plus financing) agreement, in which the seller sells the business to the buyer at an agreed-upon higher price, paid over time without interest.

3. SBA (Small Business Administration) loans generally involve interest, which would make them impermissible. However, there are Islamic financial institutions that offer Sharia-compliant business financing. These could be structured as mushāraka or diminishing mushāraka, where profits are shared or complete ownership is gradually transferred to the client over time. Researching Islamic financial institutions in your region could help you find an alternative to SBA loans.

4. Unfortunately, we are unable to recommend any Islamic advisory services due to our limited knowledge of them. In the meantime, you may consider reaching out to a mufti or Islamic scholar who specializes in Islamic finance for more personalized guidance regarding your particular business.

5. If your friends or family are comfortable offering a non-interest-bearing loan, this could be one option. However, if they prefer to invest in the business or expect a return or share, you could explore options such as murābaḥa (cost-plus financing), mushāraka (partnership), or diminishing mushāraka (a gradually decreasing partnership where complete ownership transfers over time). These Sharia-compliant structures allow for profit-sharing without involving interest. You may consult a specialist in Islamic financing to help structure this for you.

It is important to keep in mind that running a business is not easy and can often be very challenging. This is just one of the many things you may want to consider when embarking on a business endeavor. There is a lot to reflect on, from financial aspects to the time and effort required. It may be worthwhile to speak with other individuals who are already involved in business and seek their advice regarding both business in general and the specific venture you are considering. Their insights can help you determine whether it is a worthwhile pursuit. 

May Allah grant you ease in all your endeavors and bless you with the best in this world and the Hereafter. Āmīn.

And Allah knows best. 

Mf. Zeshan Ahmed
Senior Assistant Mufti, Darul Iftaa Chicago

Checked and Approved:

Mf. Abrar Mirza
Head Mufti, Darul Iftaa Chicago