Kavod HaRav,
I have a question regarding potential ribit that I observed:
Can a jewish owned business provide a Cash Advance to another jewish owned business, if the advance constitutes a sale of future receivables whereas the party funding the advance acquires the rights to future receivables of the party receiving the advanced funds until an agreed upon amount (which is above the amount advanced )is recouped by the party funding the advance. For example, the funder advances 10,000 to a business and the funder acquires 25% of this business’s future receivables until 13,000 has been recouped.
To me, this would seem very similar to a loan (ribit), but in a sense the party funding the advance becomes a partner in the business (however the funder assumes no liability or losses for the business) as such would this relationship be the same or similar to a heter iska, if so, would this be permitted without a heter iska? Is this ribit with or without a formal heter iska?
Thank you.
Answer:
Because the payback arrangement is done by means of a partnership, it is possible that there is no problem in the arrangement, and this is not considered ribis.
The reason for this is that the payment is not definite: It is possible that the company will not make the expected profits, and the “lender” will not receive back his loan.
However, it must be ensured that the “creditor” company becomes a true partner in the “borrowing” company, and that this is not a mere “cover” for receiving interest.
Best wishes, and apologies for the lateness in replying.
