Expanding Access to Capital for Muslim Communities
Shari’a-Compliant Financing
Helping small businesses succeed since 1994.
Muslims who seek to live in accordance with Shari’a principles are unable to access conventional debt capital because of Islam’s prohibition against charging or paying interest. To better serve the growing Muslim community in the Pacific Northwest, Craft3 has worked with key partners to develop Shari’a-compliant financing.
Community
Our Shari’a-compliant lending initiative is a true community partnership.
Equity
We’re striving to remove barriers to accessing capital and opportunity.
Rigor
Our Shari’a-compliant products have been created in consultation with and endorsed by a leading Islamic finance advisory consultancy.
DIMINISHING MUSHARAKAH
Commercial Real Estate Financing
Craft3’s Shari’a-compliant real estate financing enables Islamic community organizations and businesses to access capital without compromising their faith.
Our Shari’a-compliant real estate financing follows the widely accepted Shari’a financing concept known as Diminishing Musharakah and allows entrepreneurs and community leaders to purchase real estate without assembling all of the capital in advance.
In Partnership
Rather than charge interest on money borrowed, the transaction is a partnership (Musharakah) between the financier and customer. The two parties purchase and own the asset (commercial real estate) in common through a special purpose entity (SPE).
Shared Ownership
Over time, the customer will make monthly lease payments to the SPE. Those payments represent the profit generated by the asset and are distributed to each party based on their ownership. Eventually, the customer will be the sole owner.
Shared Risk
A main difference between this structure and traditional commercial real estate financing is the risk of ownership taken by Craft3. If the asset value declines, Craft3 shares in the loss, whereas traditional financing requires the customer to pay the lender in full regardless of the asset value or success of the venture.
Purchases up to $3,500,000
Cost
Fixed profit rate between 7.00% to 11.00%
Fees
Origination fee of 2% of total plus closing costs
Fees for nonprofits are 1% plus closing costs
Fees for nonprofits are 1% plus closing costs
Closing Costs
$650 plus any third-party fees for appraisal, legal, etc.
Term
Typically 3 to 7 years, with longer amortizations possible in some cases
Repayment Terms
Per the Musharakah agreement, typically consistent monthly payments depending on asset type and associated shared expenses
Financing With Craft3
Craft3 supports entrepreneurs at every step of the application process.
1
Introduce Your Business
When you’re ready to apply, complete this online form to help us learn about you and your business. If it looks like a potential fit, a Craft3 lender will reach out to talk with you about your business plan, uses of funds and collateral.
2
Apply
A Craft3 lender will invite you to apply and help you complete your application package. We will review your application and give your request the careful attention it deserves. Review usually takes 1-2 weeks, although it can be shorter or longer depending on the size and complexity of the request.
3
Decide
If we think we can help you with your request, we will notify you and outline the financing terms and the items, if any, we need for underwriting a final decision. After that we quickly move to closing and disbursement.
Customer Stories
Shari'a-Compliant Real Estate Financing
Innovative Sharia-compliant real estate financing let Cordoba Academy, an Islamic school and community organization located outside Seattle, buy a building and grow. Rather than charging interest—forbidden by Islamic law—the transaction was structured through shared ownership.
Thank You
Current Partners
