What lenders typically weigh
For this situation, UK SME lenders typically weigh a small set of signals more heavily than others. The strength of each lever affects which lenders will look at the case and what terms you might expect:
- Sharia compliance of the business
- The trading activity must be permissible under Islamic principles. Alcohol, gambling, pork, conventional interest-bearing finance and certain entertainment activities are excluded.
- Sharia compliance of the use of funds
- Proceeds must fund a compliant purpose — buying property, equipment, or goods. Refinancing conventional interest-bearing debt may be possible via specific Sharia structures.
- Standard trading history and accounts
- Underwriting otherwise mirrors conventional UK SME finance — trading history, accounts, affordability, security.
- Property or asset structure
- Property and asset purchases are common in Islamic finance because the structures (ijara, murabaha) fit asset-backed transactions naturally.
- Borrower credit
- Director credit and corporate credit history are still checked. The compliance requirement is additional to conventional eligibility, not a replacement.
Finance types that usually fit this situation
UK lenders that often look at this situation
The lenders below publish criteria consistent with this situation. Final approval is always subject to lender underwriting.
Qardus
Sharia-compliant SME finance
- Amount
- £30k–£500k
- Speed
- Decision 48h; funding after campaign
- Security / PG
- Unsecured marketed; no outstanding CCJs
- Data confidence
- High
Al Rayan Bank
Islamic commercial property finance
- Amount
- £2.5m–£32m
- Speed
- Not disclosed
- Security / PG
- Property-backed
- Data confidence
- Medium
Gatehouse Bank
Business / property finance
- Amount
- Not clearly public; historic up to 70% FTV
- Speed
- Not disclosed
- Security / PG
- Property-backed
- Data confidence
- Low / medium
BLME
Sharia commercial real estate
- Amount
- £5m–£25m
- Speed
- Not disclosed
- Security / PG
- Real-estate-led
- Data confidence
- Medium
ADIB UK
Islamic CRE finance
- Amount
- Not disclosed
- Speed
- Not disclosed
- Security / PG
- Bespoke property finance
- Data confidence
- Low / medium
If you can't qualify yet
If specific Islamic finance products aren't accessible, the gap is usually compliance of business or use of funds, or simply lender appetite for the size/structure. The UK Islamic finance market is smaller than conventional, so product depth varies. For unsupported sizes or sectors, some borrowers use conventional asset finance or commercial mortgage where the underlying transaction is still asset-backed; this is a religious decision for each borrower to make with appropriate guidance. Specialist Islamic finance brokers can also identify niche providers not widely marketed.
Frequently asked questions
- What is murabaha?
- Murabaha is a cost-plus sale structure used in Islamic finance. The bank buys the asset (property, equipment, goods) at the purchase price and sells it to the business at a marked-up price, paid in instalments. The mark-up replaces interest as the bank's return.
- What is ijara?
- Ijara is an Islamic lease — the bank owns the asset and leases it to the business across the useful life. At the end, ownership can transfer (similar to hire purchase) or the asset returns to the bank.
- Is Islamic finance more expensive than conventional?
- Headline costs are usually broadly comparable to conventional UK SME finance, though pricing varies by product and lender. The commercial outcome is intentionally similar; the structures differ.
- Can I refinance conventional debt with Islamic finance?
- Sometimes, via specific Sharia structures that pay off the conventional facility and replace it with a compliant one. Discuss with the Islamic lender's Sharia board or compliance team at application.
- Which UK banks offer Sharia-compliant business finance?
- Al Rayan Bank, Gatehouse Bank, Bank of London and The Middle East (BLME) and Abu Dhabi Islamic Bank UK (ADIB UK) are the main authorised UK providers. Qardus provides Sharia-compliant SME finance. Coverage by sector and product varies.