Question Summary:
I am currently doing business of distribution of food products by taking money from people

Question Detail:

I am currently doing business of distribution of Food products,
by taking money from people for which i am giving them a profit of around Rs 1250 to 1500 pm on every one lac invested by them.Now they are in need of money. Can i go for a bank Cash credit, wherein the bank charges me for the amount been used by us Also some mortgage has to be kept with the bank for surerity of the money been used.
I i am not having my own money i will have to close the business.Currently two of my younger brothers, myself & a non muslim employee is taken care of from the icome of the business.

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
We understand that you raise working capital from investors/sleeping partners to fund your food distribution business. You also distribute monthly profits/dividends to these investors. Your investors wish to liquidate their investments with your company and you require an alternative cash flow solution to fund your business and pay out your investors.
 
Kindly clarify the following in order for us to advise you further:
 
1. Are the dividends/profits fixed or variable? Do your investors receive returns on the basis of actual profits accrued or do you offer a fixed upfront return? How do you calculate your profit sharing arrangement with your investors?
 
2. Do you have a contract with your investors? What defines the relationship between you and your investors?
 
3. Why do the investors intend to liquidate their investments? Did you have a disagreement with your investors?
 
And Allah Ta’āla Knows Best
Ismail Desai,
Darul Iftaa
 
Checked and Approved,
Mufti Ebrahim Desai.