Is giving a loan (Qard) permissible?
Chapter on Loan (Qard)
Al-Mughni
Book of Sales
Primary text
Giving a loan is permissible based on Sunnah and consensus (Ijma). The basis in Sunnah is narrated by Abu Rafi that the Prophet, peace be upon him, took a young camel on loan from a man. When the camels of charity arrived, the Prophet commanded Abu Rafi to repay the man with a young camel. When Abu Rafi could only find a well-aged four-year-old camel (Ruba'i), the Prophet instructed him to give it, saying, 'Give it to him, for verily the best of people are those best in repayment.' This is narrated by Muslim. Furthermore, a hadith from Ibn Mas'ud states that the Prophet said, 'No Muslim loans a loan to a Muslim twice except that it is like giving charity once.' Consensus has been established among Muslims regarding the permissibility of the loan.
Supporting text
The virtue of giving a loan sometimes surpasses that of giving charity. Anas narrated that the Prophet, during the Night Journey, saw written at the gate of Paradise: 'Charity is multiplied tenfold, and a loan is multiplied eighteenfold.' When asked why the loan is superior to charity, Gabriel replied, 'Because the beggar asks while he still possesses something, but the one who borrows does so only out of necessity.' This is narrated by Ibn Majah.