London
A new UK-based Shariah-compliant crowdfunding platform providing business financing to small and medium sized enterprises (SMEs) launched at the end of June. Qardus Limited, which connects SMEs to investors, is an appointed representative of Share In Ltd that is authorised by the Financial Conduct Authority.
“At the core Qardus is a peer-to-peer platform for everyone, whether Muslim or non-Muslim,” Hassan Daher, Qardus founder and CEO told Salaam Gateway. “Our platform is Shariah-compliant and open to investors seeking to generate superior returns as well as having a social impact.” Shariah-compliant crowdfunding is not a new concept in the UK, that already has platforms such as property-focused Yielders, but there are none already providing SME business financing.
“In terms of competition we would be the first to offer an Islamic business financing facility in the UK as the Islamic banks look at much larger ticket sizes,” claimed Daher. “In the UAE there is Beehive. Other fintechs in the UK such as Funding Circle and Iwoca only offer conventional financing facilities, not Islamic,” he added. In other regions, Kapital Boost, which was founded in 2015, was Asia’s first Islamic P2P crowdfunding platform for SMEs.
Business Model
Qardus connects SMEs, seeking Shariah-compliant financing solutions of up to £100,000 in working capital, to investors. The platform offers the unsecured financing for a period of up to two years in the form of commodity murabahah.
Murabahah is an Islamic financial contract whereby one party buys an asset or commodity and then sells it to another party with a mark-up. “SMEs need working capital that is fast and affordable,” said Daher. “This is why we are currently using the murabahah contract. We are studying different financing structures like musharakah or mudarabah to provide different financing types later on, however these can be difficult to price competitively because they are more equity-focused.”
The platform is open to investors in the UK and Europe. Investors from outside these geographies would need to contact Qardus directly to discuss their eligibility.
The minimum investment size is £100 and investors can expect over 10% return per annum but capital is at risk, Daher noted. There is currently one company looking for financing listed on the platform. The company, from the pharmaceuticals industry, is seeking £100,000 for inventory purchases, and is offering a projected return of 12.15%.
Qardus charges a fee on financing raised by the borrower, which ranges from 2% to 5% on the entire financing raised on platform. Based on the current business model, Qardus aims to breakeven within the next eight months, according to Daher.
Borrower Criteria
Qardus’ internal team screens businesses seeking financing via their platform. “We source the SMEs on our platform, conduct a Shariah screening of their underlying activities, risk profile them and price the financing facilities accordingly,” said Daher. Part of the criteria is that the business has to have a minimum turnover or assets of £100,000, be in business for at least three years and not have any county court judgements (CCJs) against it.
As well as being Shariah-compliant, the business has to be from recession-proof sectors such as pharmaceuticals, food and beverages, and food manufacturing, as businesses in these areas make money during the pandemic, argued Daher. “We aim to have 150 SMEs across the UK in the first year, first in pharmacy, food, then we’ll consider other sectors like retail, manufacturing,” he said.—Agencies
