Halal and Sharia-compliant UK business finance
Sharia-compliant UK business finance avoids interest (riba) and is built around three approved trade or partnership contracts: Murabaha (cost-plus sale), Ijara (lease-to-own) and Diminishing Musharaka (declining co-ownership). Four UK PRA-regulated banks matter: Al Rayan Bank, Gatehouse Bank, BLME and QIB UK. We also cover Kestrl, a Sharia-aligned money app that doesn't lend to businesses. FundBiz reviews them editorially. We are not a lender and do not match or recommend providers.
Related facilities
Sharia-compliant structures apply across products: for property see the commercial mortgage route, for equipment asset finance, and for short-term needs bridging finance.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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UK Sharia-compliant commercial finance providers
Tier reflects our editorial assessment, not a customer-review score. How we rate lenders.
Al Rayan Bank
Top tierSharia-compliant commercial finance · £250k to £20m+
Al Rayan is the UK's largest Islamic bank and the most credible UK Sharia commercial-finance counterparty. Owned by Masraf Al Rayan (Qatar). PRA-regulated bank with FSCS deposit protection on linked accounts. Best fit for property-backed commercial finance where the structure (Murabaha or Diminishing Musharaka) is genuinely Sharia-compliant rather than relabelled.
Gatehouse Bank
StrongSharia-compliant commercial property and BTL finance · £500k to £25m+
Gatehouse is a UK PRA-regulated Sharia-compliant bank with a strong commercial property focus. More restricted product range than Al Rayan but pricing on commercial-mortgage-equivalent products is often more competitive on owner-occupier and BTL deals £500k+. Sharia Supervisory Board oversight.
BLME (Bank of London and the Middle East)
StrongSharia-compliant commercial finance and asset finance · £500k to £50m+
BLME (part of Boubyan Bank, Kuwait, as at 2026) is a wholesale-focused Sharia-compliant UK bank. Engages on larger commercial finance, asset finance and structured deals. Less retail-friendly than Al Rayan; more institutional-feeling counterparty. Best for larger established UK SMEs with structured-deal requirements.
Qatar Islamic Bank UK
SolidSharia-compliant private banking and commercial finance · £1m to £50m+
QIB UK is the UK arm of Qatar Islamic Bank, focused on high-net-worth Sharia-compliant private banking and larger commercial property and structured-finance deals. Not for SMEs sub-£1m. Strong Sharia governance reported via the parent bank's Sharia board.
Kestrl
SolidSharia-aligned money app (e-money account and card, budgeting and investing); not a lender · Not applicable: Kestrl doesn't lend
UK Sharia-compliant money app focused on budgeting and a Sharia-aligned investment marketplace, not an SME lender. It is not a bank: the Kestrl account and card are issued by AF Payments Limited, which is authorised by the FCA as an e-money institution (per Kestrl's own site). Useful to know about as a Sharia-aligned money app, but it doesn't itself lend to businesses.
How Sharia-compliant commercial finance works
Murabaha (cost-plus sale)
The bank purchases the asset (property, equipment) and sells it to you at cost plus an agreed profit, payable in instalments. The instalment plan resembles a fixed-rate loan in cashflow terms but is structured as a deferred sale, not a loan.
Ijara (lease-to-own)
The bank purchases the asset and leases it to you. Lease payments are split between rent and purchase instalments. Title transfers at the end of the lease. Common for asset finance and equipment.
Diminishing Musharaka (declining co-ownership)
You and the bank co-own the asset. You pay rent on the bank's share and progressively buy out that share over time. By the end of the agreement, you own the asset outright. This is the dominant structure for Sharia-compliant commercial property in the UK.
Is Sharia-compliant finance more expensive than a conventional loan?
Often comparable on headline cost, sometimes higher once full transaction costs are included. The structures (Murabaha, Ijara, Diminishing Musharaka) require the bank to purchase the asset before selling or leasing to you, which adds legal cost and SDLT considerations. PRA-regulated UK Islamic banks publish their effective profit rates so you can compare against APR.
On commercial property £500k+ (the strongest UK Sharia-finance use case), all-in cost is often close to conventional commercial mortgages from challenger banks, though this varies by deal and you should compare the effective profit rate against APR on your own offer. On working capital and short-term finance, the gap widens because the structuring overhead is fixed.
What "Sharia-compliant" means in practice
The UK Islamic banks here are PRA-regulated like conventional banks. Sharia compliance is governed by an in-house Sharia Supervisory Board (SSB) of qualified scholars who review and approve product structures. The banks state that their SSB confirms compliance, typically via an annual fatwa.
That sits alongside FSCS deposit protection on linked savings, FCA prudential supervision and the same UK consumer-protection regime that applies to any UK bank. There's no trade-off between Sharia compliance and UK regulatory protection. Verify any specific governance claim with the provider before relying on it.
Sectors where UK Sharia finance fits well
- · Halal restaurants and food businesses: commercial mortgages and asset finance for kitchen fit-outs.
- · Buy-to-let landlords: Diminishing Musharaka BTL finance from Gatehouse Bank.
- · Owner-occupier commercial property: the strongest UK Sharia commercial finance use case.
- · Multi-faith B2B businesses: owner-led companies where conventional interest is morally unacceptable to the principal.
- · Charity and social-enterprise structures: some Sharia banks engage on terms conventional banks can't match.
Frequently asked questions
Can a non-Muslim use Sharia-compliant business finance?
Yes. UK Sharia banks lend on commercial terms, not religious affiliation. The structure is the regulatory question, not the borrower's faith.
Is the Bank of England base rate relevant?
Indirectly. Sharia banks set profit rates with reference to market conditions. When the base rate moves, Sharia profit rates broadly track. The mechanism is different (a benchmarked profit rate, not an interest rate) but the cashflow effect is similar.
Can I refinance a conventional loan into a Sharia structure?
Yes, on commercial property in particular. Most UK Sharia banks will refinance an existing conventional commercial mortgage into a Diminishing Musharaka structure provided the underlying asset and borrower meet their criteria. Expect SDLT considerations on the structural transfer.
Send an enquiry
Tell us ticket size, the asset or use case, trading history and sector. If you send an enquiry, we pass your details to a business finance broker, who will contact you about your options. Limited companies, LLPs and partnerships with four or more partners only.
Check your options →Editorial only. FundBiz is not a regulated adviser; consult an FCA-authorised Sharia-compliant broker or the bank directly for advice. See our methodology.