Who offers Islamic business finance in the UK?

The main FCA-authorised Islamic banks are Al Rayan Bank, Gatehouse Bank, Bank of London and The Middle East (BLME) and Abu Dhabi Islamic Bank UK (ADIB UK). Qardus provides Sharia-compliant SME finance via a peer-to-peer model. Some conventional UK banks offer Islamic finance windows but the dedicated providers have deeper product range.

Is Islamic business finance more expensive than conventional?

Not inherently. The mark-up on a Murabaha deal is set so the total cost is comparable to a conventional loan over the same period — sometimes slightly higher to reflect the smaller provider pool and structural complexity, sometimes competitive. Compare the total amount repayable, not the headline figures.

Can a non-Muslim business use Islamic finance?

Yes. UK Islamic finance is open to any business, regardless of religion. The structural transparency (single agreed mark-up rather than variable interest) appeals to some businesses that aren't motivated by Sharia compliance specifically.

What's a Murabaha and why does it matter?

Murabaha is the most common Islamic finance structure for asset purchase. The bank buys the asset from the supplier and sells it to the customer at an agreed mark-up payable over time. It looks like a loan in effect, but the underlying contract is a sale — which is what makes it Sharia-compliant.

Is Sharia-compliant working capital finance available in the UK?

More limited than asset finance. Qardus, Al Rayan and a few others offer Sharia-compliant facilities that can cover working capital purposes, typically structured as Murabaha against a specific trade asset rather than a generic line of credit. The conventional UK working capital market is much deeper.

Islamic business finance vs conventional finance — UK guide

When each option usually fits

When Islamic business finance usually fits

Signal: — Sharia compliance is a requirement of the business or the director, not a preference.
Signal: — The funding need is asset purchase, property purchase or trade finance — the structures Islamic finance is well-developed for.
Signal: — Transparency of total cost matters and a single agreed mark-up is preferred to variable APR.
Signal: — The business is comfortable with a more limited UK provider pool in exchange for structural fit.

When Conventional business finance usually fits

Signal: — The funding need is working capital, revolving credit or short-term cashflow — areas where Islamic finance UK products are less developed.
Signal: — Speed matters; the conventional digital lender pool is much wider and approval can be faster.
Signal: — Pricing competition matters — the broader conventional market typically delivers tighter rates by volume.
Signal: — Sharia compliance is not a requirement and the additional structural complexity is not justified.

More on Conventional business finance →

Side-by-side comparison

Dimension	Islamic business finance	Conventional business finance
Pricing structure	Agreed mark-up, rent or profit share — no interest	Interest-based APR or factor rate
Underlying contract	Murabaha (cost-plus sale), Ijara (lease), Musharakah (partnership)	Loan agreement, lease agreement or revenue-share agreement
Sharia compliance	Yes — overseen by Sharia supervisory board	Not Sharia-compliant
UK provider pool	Limited — Al Rayan, Gatehouse, BLME, ADIB UK, Qardus, a few others	Wide — hundreds of UK SME lenders across products
Product range	Best developed for asset, property and trade finance	Full range — working capital, MCA, invoice finance, loans, cards
Typical use cases	Property purchase, commercial mortgage, equipment, trade finance	Working capital, expansion, asset purchase, refinance, cashflow
Speed to decision	Typically 2–4 weeks for asset or property facilities	Hours to days for digital working capital; weeks for larger facilities
Total cost comparison	Single agreed mark-up — total cost known up front	APR plus fees — typically clear in offer but multiple components
Personal guarantee	Commonly required, structured within Sharia framework	Commonly required on unsecured-equivalent facilities
Regulatory status	FCA-authorised Islamic banks regulated as UK banks	FCA-authorised banks and unregulated commercial lenders

Shared considerations

Both are subject to lender underwriting, affordability checks and director credit assessment.
Both typically need a director personal guarantee for unsecured-equivalent facilities.
Both require the same core documents — bank statements, accounts, VAT returns.
Total cost (mark-up + fees vs APR + fees) is the meaningful comparison, not the headline number.

Frequently asked questions

Who offers Islamic business finance in the UK?: The main FCA-authorised Islamic banks are Al Rayan Bank, Gatehouse Bank, Bank of London and The Middle East (BLME) and Abu Dhabi Islamic Bank UK (ADIB UK). Qardus provides Sharia-compliant SME finance via a peer-to-peer model. Some conventional UK banks offer Islamic finance windows but the dedicated providers have deeper product range.
Is Islamic business finance more expensive than conventional?: Not inherently. The mark-up on a Murabaha deal is set so the total cost is comparable to a conventional loan over the same period — sometimes slightly higher to reflect the smaller provider pool and structural complexity, sometimes competitive. Compare the total amount repayable, not the headline figures.
Can a non-Muslim business use Islamic finance?: Yes. UK Islamic finance is open to any business, regardless of religion. The structural transparency (single agreed mark-up rather than variable interest) appeals to some businesses that aren't motivated by Sharia compliance specifically.
What's a Murabaha and why does it matter?: Murabaha is the most common Islamic finance structure for asset purchase. The bank buys the asset from the supplier and sells it to the customer at an agreed mark-up payable over time. It looks like a loan in effect, but the underlying contract is a sale — which is what makes it Sharia-compliant.
Is Sharia-compliant working capital finance available in the UK?: More limited than asset finance. Qardus, Al Rayan and a few others offer Sharia-compliant facilities that can cover working capital purposes, typically structured as Murabaha against a specific trade asset rather than a generic line of credit. The conventional UK working capital market is much deeper.