The Difference Between a Loan and a Partnership
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The second question of Fatwa No. ( 21236 )
Q2: Regarding the field of partnership in Islam: there is the qirad (or mudarabah) partnership. What is the difference between a loan (qard) and a qirad?
A2: A loan (qard) is when a person gives money to another to benefit from it, and then the latter returns its equivalent. As for the qirad or mudarabah: it is when a person gives a known amount of money to another to trade with it for a share of the profit. The first is the capital, and the second is the work. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q2: Regarding the field of partnership in Islam: there is the qirad (or mudarabah) partnership. What is the difference between a loan (qard) and a qirad?
A2: A loan (qard) is when a person gives money to another to benefit from it, and then the latter returns its equivalent. As for the qirad or mudarabah: it is when a person gives a known amount of money to another to trade with it for a share of the profit. The first is the capital, and the second is the work. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.