Answer
Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this Fatwa:
Financing investment from a loan without interest is permissible.
In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:
Riba (usury) is any increment in a loan or a debt as mentioned in Verse 2:279 that is anything above the principal of the loan or debt.
There is no difference between loans for consumption and loans for investment or to buy goods for trade.
A loan without interest is, of course, permissible all the time but a loan with interest is not.
Financing investment from a loan without interest is also permissible.
In other words, the prohibition is of the interest not of the loan and purpose of using the money is irrelevant.
Allah almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.