Types Of Islamic Financing That Can Be Used For You – Sharia financing is currently growing and in demand by the public. Its various uses, both for consumptive and productive needs, as well as the principles according to the Shari’a that it applies make people start to switch to using this financing facility.
Especially, behind all activities that uphold Islamic principles, sharia funding does not only serve Muslim customers but also non-Muslim customers. before taking advantage, you need to know more about the intricacies and things that this financing solution can fund. Let’s see the following discussion!
What Is Shariah Financing?
Sharia funding is an activity to provide costs that practice a system according to Islamic law. The financing institutions and customers involved in this activity have agreed on the rewards and the refund period. In contrast to conventional financing, this type of funding must comply with the regulations set by the DSN MUI (National Sharia Council of the Indonesian Ulema Council).
Types Of Sharia Financing
After understanding the definition and types of Islamic funding, you must know the various things that can be financed by this financial facility. Here are several types of sharia-based financing and their explanations!
This financing is usually used by individuals and aims to finance needs outside the business. Generally, there are 5 contracts applied in consumptive financing, including, cards and ijarah, Cristina, ijarah, murabahah, and IMBT.
Working Capital Financing
This type of financing takes place in the short term and is given to business owners to capitalize on their business according to sharia principles. Working capital financing can facilitate prospective businesses, following state law, and not violating Islamic law. In addition, this financing aims to eliminate risk while optimizing the profit of financial institutions.
The provision of funds to business owners needs to pay attention to several things, such as the type, scale, level of difficulty, and the characteristics of the transactions of the business being carried out. Not only that, but financial institutions must also be able to carry out an in-depth analysis of the source of income for the project to be funded.
In contrast to working capital financing, which is short-term in nature, investment financing is carried out in the medium to long term. This type of financing finances the purchase of capital goods for various purposes, for example, company expansion, relocation of existing projects, rehabilitation, the establishment of new projects, and modernization. Islamic investment financing requires several analyzes, including:
Ratio Analysis, Ratio analysis is used to identify the financial feasibility, projections, performance, and probability of a company.
Break-Even Analysis, This analysis is carried out to determine the lowest price and production level so that the project can operate without being threatened with risk. Then, to decide on investment financing, various considerations are needed.
Debt Transfer Financing
This type of financing is used to transfer debt due to ongoing non-shari’a transactions. There are two types of customer debt to conventional financial institutions that can be taken over, including principal debt plus interest or principal debt only. In dealing with debt in the form of principal plus interest, Islamic financial institutions offer card contracted services. Meanwhile, to handle the principal debt, customers can use the services of hawala.