Profit Sharing Loan System

In capital lending, the profit sharing system is chosen by those who do not want capital loans with an interest system. Besides being chosen by Muslims who want to choose a financial system according to the Baxia’a, this system is also chosen by those who do not want to apply the interest system when applying for loans. However, do you already know the subtleties of profit sharing in Indonesia? What are the requirements that must be met in an effort to lend capital based on this profit sharing system?


Types of Profit Sharing Calculation in Capital Loans

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In contrast to interest-based loans, the profit-sharing system requires the sharing of revenue or business based on a contract that was signed and agreed upon in advance. In general, the Islamic economic system recognizes two types of profit sharing. The first requires sharing of revenue based on total revenue after deducting operational costs (net income), while the second is based on profit sharing based on gross income (not yet deducted by operational costs). The amount of profit sharing is then agreed upon in the contract, the amount agreed upon before the contract is signed, so the results are not permanent.

As already explained, the main element in these three transactions is the existence of an agreement agreed by both parties. Whatever the purpose of capital lending or transactions, both parties must sign an agreement with the agreed items, including the profit sharing agreed by all.


Requirements for Profit Share Capital Loans

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In accordance with the nature of the agreement, the profit sharing loan must meet several conditions to be considered valid, namely:

Only involves parties involved in the business.

In the case of capital loans, when the contract is made, the only parties involved in the agreement are those who are involved in the business. For example, customers who borrow money for business capital and banks are included in the agreement, but family members who are not involved in the business are not included in the party entitled to profit.

This type of business must obey Islamic law.

In Islamic capital lending or profit sharing, the types of businesses that are capitalized may not revolve around matters that are prohibited in Islamic law, such as gambling, pornography or alcoholic beverage sales.

Investors must get their capital back.

In a production sharing agreement, both parties must get what has been agreed. Investors, aka lenders, must get their capital back fully, whether the borrower benefits or not. This is one of the risks of a profit sharing loan agreement, where the loss will be borne by both parties mentioned in the agreement.

Despite having clear risks, the type of loan agreement based on profit sharing also gives certain benefits. Capital loans for businesses in the form of profit sharing can provide significant benefits if the agreement between the lender and the customer is clearly regulated.

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