One of the major challenges faced by Muslim-owned small businesses is that most lenders require interest payments, which are prohibited under Sharia law. This puts many minority and immigrant-owned businesses at a major disadvantage.
In the spring of 2022, Suffolk Law’s Transactional Clinic prepared Sharia-compliant loan documents to help area nonprofit African Community Economic Development of New England (“ACEDONE”) establish a loan program to provide nano-loans (<$5,000) to small businesses owned by African refugees and asylees, many of whom are Muslim.
Professor Carlos Teuscher (in photo), director of the Transactional Clinic, notes that while Sharia-compliant lending is common elsewhere in the world, the loan program created by ACEDONE is one of very few across the country. Clinic students collaborated with the Abu Dhabi office of global law firm Ashurst on the Sharia-specific issues on the loan documents.
Teuscher notes that traditional U.S. lenders don’t think often enough of immigrant communities as key lending opportunities. “There needs to be a shift in how they’re approaching lending opportunities, especially if we're thinking about supporting communities of color and immigrant communities,” Teuscher notes. ”Financing is a huge need for all types of small businesses.”
Students in the Transactional Clinic also have helped incorporate several worker-owned cooperatives, multi-stakeholder cooperatives, and community land trusts in Massachusetts.
