The regulatory position, first
How Islamic finance actually differs
The core prohibition is on riba, interest. The structures that replace it are not cosmetic renamings; they change what the transaction is and who bears which risk.
| Structure | Mechanism | Typically used for |
|---|---|---|
| Murabaha | The institution buys the asset and sells it to you at a disclosed mark-up, payable over time | Asset and inventory purchase |
| Ijara | Lease, with the institution owning the asset and you paying rent, often with transfer at the end | Equipment, vehicles, property |
| Musharaka | Partnership with shared capital, shared profit and shared loss | Joint ventures, project finance |
| Mudaraba | One party provides capital, the other expertise; profit shared, capital loss borne by the provider | Investment and fund structures |
| Wakala | Agency arrangement with the institution acting as agent for a fee | Treasury, working capital |
The practical consequence is that the institution frequently ends up owning or co-owning the asset for part or all of the term. That has real implications for control, for insurance, and for what happens if things go wrong, and it is where a business used to conventional lending gets caught out.
What we do
- Assessment. Is the requirement financeable, at what sort of size, and on what structure. Sometimes the answer is not yet, and that is worth hearing in week one.
- Structure selection. Matching the requirement to the appropriate structure, working with the institution's own Sharia governance rather than around it.
- Preparation. Financials, projections, the business case, security position and the documentation an institution will require. This is the bulk of the work and the reason most applications fail.
- Institution selection. Appetite varies enormously by sector, size and structure. Approaching the wrong institution wastes months.
- Coordination through diligence to drawdown.
What makes applications fail
- Incomplete or inconsistent financials. By some margin the commonest cause.
- Projections nobody believes, unsupported by trading history.
- An unclear security position, or assets already encumbered.
- Approaching an institution with no appetite for the sector or the size.
- Underestimating how long diligence takes and running out of runway during it.
Fees
A fee for the preparation and coordination work, agreed in writing before we start, plus a success element on drawdown where that is agreed at the outset. Never a deposit, never an advance fee, and never a payment to release a facility.
Whose side we are on
Al Hisn Partners acts for the client and only the client. We are retained by you, we take instructions from you, and our fee is paid by you.
We are paid by you to find and assess financing, not by the institution providing it. A broker paid by the lender is selling the lender's product, whatever they call themselves.
Common questions
Do you provide the financing yourselves?
No. We are not a lender, bank or licensed financial institution. Facilities come from licensed Islamic financial institutions regulated in their jurisdiction. We structure, prepare, identify institutions and coordinate.
Will you ask for a deposit or advance fee to arrange a facility?
Never. Advance fee fraud is endemic in this market and the pattern is always the same: a facility is promised, a fee is requested to release it, and nothing appears. No legitimate arranger asks for money to release funding.
Is Islamic finance just conventional lending with different names?
No. The structures change what the transaction actually is and who bears which risk. In most of them the institution owns or co-owns the asset for part of the term, which has real consequences for control and for what happens if things go wrong.
How long does an application take?
Preparation typically takes weeks. Institutional diligence and approval usually takes months. Businesses that underestimate this and run out of runway during diligence are a common failure, so plan for longer than you expect.
What is the commonest reason applications fail?
Incomplete or inconsistent financials, by a wide margin, followed by projections unsupported by trading history. Most of our work is preparation for exactly this reason.
Who pays you, and do you ever take a fee from the other side?
Our client pays us, and only our client. We do not accept a fee, commission, rebate or referral payment from a counterparty, or from any agent, provider, supplier or institution we introduce or work alongside. If one is offered, we decline it. This applies across every service we provide, without exception.