The Biblical Hebrew terms for interest are neshekh (Hebrew: נשך), literally meaning a bite, and marbit or tarbit (מרבית/תרבית), which refers to the lender's profit.[6] Neshekh refers to interest deducted in advance from the loaned money given to the borrower; the words marbit and tarbit refer to interest added to the amount that the borrower must repay.[7] The words marbit and tarbit, for the form of interest most familiar in modern times, became ribit (ריבית) in modern Hebrew. (Wikipedia)
Do not charge interest (Ribis) while lending money or food.
Do not cause your fellow Jew to charge interest (i.e. do not pay interest in return for a loan - a prohibition against the debtor paying interest).
Do not act as an accomplice to the charging of interest (an injunction against even consigning or certifying any usurious financial transaction).
A usurious creditor violates six biblical prohibitions.
Usury - charging interest - is equivalent to atheism.
An entrepreneur who lends money with interest will suffer financial reverses.
The usurer will not experience Resurrection.
(JLaw)
(א) שמותר להלוות לעובד כוכבים ולמומר ברבית. ובו ג' סעיפים:
דבר תורה מותר להלוות לעובד כוכבים ברבית וחכמים אסרוהו אם לא כדי חייו או לת"ח או ברבית דרבנן והאידנא מותר (בכל ענין) (הטור):
(ב) מומר מותר להלוותו ברבית ואסור ללוות ממנו ברבית: הגה ויש מחמירין אף במומר להלוותו (המרדכי והגהות מיימוני בשם ראבי"ה ורש"י וסמ"ג ובמהרי"ל) וטוב להחמיר אם אפשר להשמט ממנו:
(ג) כותיים יש להם דין מומר לעבודת כוכבים. הקראים אין להם דין מומרים ואסור להלוותם ברבית ואין צריך לומר שאסור ללוות מהם ברבית: הגה וע"ל סימן קנ"ז וקכ"ד דין אנוסין. תינוק שנשבה לבין העובדי כוכבים ואינו יודע מתורת ישראל כלל דינו כקראים ואסור להלוות לו ברבית (כך משמע מב"י לדעת הרמב"ם) ולכן מומרת לעבודת כוכבים שיש לה בן מן העובד כוכבים שהבן הרי הוא כמוה ונקרא מומר אסור להלוות לו ברבית (מרדכי פ' החולץ) דהוי כתינוק שנשבה לבין העובדי כוכבים:
(1) That it is permitted to lend to gentiles and apostates with usury, in three parts: The Law declared it is permitted to lend to gentiles with usury, but the Sages proscribed it except for one's living or by a scholar or if it is only rabbinical usury. And nowadays it is permitted.
(2) Usury to apostates is permitted, but borrowing from them usurily is proscribed. GLOSS [RMA]: And some are strict even re usury to apostates (the Mordechai and the Haga'os Maimonios citing RABIH and RSHI and SMG and in MHRIL) And it is good to be strict if it is possible to elude it.
(3) Samaritans have the status of apostates. Karaites do not have the status of apostates, and usury to them is proscribed, and it is not necessary to say that it is proscribed to borrow from them usurily. GLOSS [RMA]: And see the laws of the immured. An infant which fell into the captivity of gentiles and doesn't know any Law is like a Karaite and usury to them is proscribed. And also an apostress with a child from a gentile, for the son is — behold — like her and an apostate, usury to him is proscribed, for he is like an infant captured by gentiles.
Heter Iska:
A heter iska is a halachically approved way of restructuring a loan or debt so that it becomes an investment instead of a loan. This presumes that the investor assumes some element of risk should the business fail, which is one basic difference between an investment and a loan. An investor could potentially lose money, whereas a borrower always remains responsible to pay. (yeshivah.co)
If at all possible, should be sought for any commercial transaction that may involve Ribis. (JLaw)
Kol Torah 40
It is a legal document which transforms the loan [or part of it] into an investment, with a remote chance of loss of principal to the lender. Since ribbis is only forbidden when a fully guaranteed loan takes place, this tool allows the lender to earn “profits” from his “investment” as opposed to “interest” from a “loan”, and it is therefore permitted. Heter iska transactions are very common today and, when done under the auspices of an expert in these matters, are used in many business dealings in a permissible manner.
a heter iska is valid only if the money is being borrowed to invest in a business or in a property, or if the money being borrowed will free other money to be used for a business transaction. A person who borrows money to pay for his daughter’s wedding, for instance, or for any other ongoing expenses, and does not have any profit-generating holdings or assets, may not use a heter iska to borrow money (9). (Torah.org)
Jewish Banks or Corporations:
A lenient ruling by Harav M. Feinstein (1) holds that a corporation may pay ribbis for deposits, loans, or credits which it receives, even if the corporation is totally owned by Jews. The reason for the leniency is that a “borrower” is halachically defined as someone who has personal responsibility to pay a loan. When a bank or another corporation is the “borrower”, the loan is guaranteed by the company’s assets, but not by any individual. Thus there are no Jewish “borrowers” and ribbis may be paid by the bank or the corporation.
Under no circumstances, however, is it permitted to borrow money from a Jewish-owned bank or corporation. Since the borrower is an individual who accepts personal responsibility to repay the loan, the above leniency does not apply.
Similarly, lending money to a Jewish-owned corporation with the personal guarantee of repayment by the owners would be prohibited even according to Harav Feinstein’s lenient opinion.
For the above reason it is prohibited to buy shares in a publicly traded bank which has a majority of Jewish owners and does not use a proper heter iska when borrowing money from Jews (6). A company in which most of the shareholders are not Jewish but the Jewish minority has significant enough holdings that their opinion carries weight in management decisions, is also considered a Jewish company according to the opinion of many poskim (7).
(Torah.org)
Example of when it is permitted:
Rent is only due at the end of every month. Charging more for not paying in advance is not a premium - Ribis - for use of the renter funds, but rather a free market price. It is the landlord's prerogative to waive some of the rent () for early payment. Most business transactions - at least in Talmudic times - were payable immediately. Any price differential for later payment would be, in effect, charging the purchaser for temporary use of the seller's fund - Ribis. (JLaw)
(ה) אֲפִלּוּ אוֹמֵר לוֹ הַלֹּוֶה בִּשְׁעַת נְתִינַת הָרִבִּית שֶׁהוּא נוֹתְנָהּ לוֹ בְּמַתָּנָה, גַּם כֵּן אָסוּר לְקַבְּלָהּ מִמֶּנּוּ. אֲבָל אִם כְּבָר לָקַח מִמֶּנּוּ רִבִּית, וְהַמַּלְוֵה עוֹשֶׂה תְשׁוּבָה, וְרוֹצֶה לְהַחְזִירָה לְהַלֹּוֶה וְהוּא מוֹחֵל לוֹ, מֻתָּר.
(5) Even if the borrower tells him at the time of the ribis payment that he is giving it to him as a gift, it is also prohibited to accept it from him. But if he already accepted the interest from him and then the lender repents and wants to return it to the borrower, and he the (borrower) waives it to him, [then] he is permitted [to keep the interest].
(י) אֲפִלּוּ טוֹבַת הֲנָאָה שֶׁאֵינָהּ מָמוֹן, אָסוּר לְהַמַּלְוֵה לֵהָנוֹת מִן הַלֹּוֶה, כְּגוֹן שֶׁאִם הַמַּלְוֵה הוּא בַּעַל מְלָאכָה, וְהַלֹּוֶה הַזֶּה אֵין דַּרְכּוֹ לִתֵּן לוֹ מְלָאכָה בְּפַעַם אַחֶרֶת, רַק עַתָּה מֵחֲמַת שֶׁהִלְוָהוּ רוֹצֶה לָתֵת לוֹ מְלַאכְתּוֹ, אָסוּר (קס).
(10) Even advantages that are not monetary may not be derived by the lender from the borrower; for instance: if the lender is a craftsman, and it is not usual for this borrower to give him work at other times, but now, in return for the loan, he wants to give him work. This is prohibited.
(ח) צָרִיךְ הַמַּלְוֵה לִזָּהֵר שֶׁלֹּא לֵהָנוֹת מִן הַלֹּוֶה, שֶׁלֹּא מִדַּעְתּוֹ כָּל זְמַן שֶׁמְּעוֹתָיו בְּיָדוֹ, אֲפִלּוּ בְּדָבָר שֶׁהָיָה עוֹשֶׂה לוֹ אַף אִם לֹא הִלְוָהוּ. שֶׁכֵּיוָן שֶׁנֶּהֱנָה שֶׁלֹּא בִּרְשׁוּתוֹ, נִרְאֶה שֶׁסּוֹמֵךְ עָלָיו שֶׁבִּשְׁבִיל מְעוֹתָיו שֶׁבְּיָדוֹ יִמְחַל לוֹ. אֲבָל אִם נֶהֱנָה מִמֶּנּוּ מִדַּעְתּוֹ, מֻתָּר בַּדָּבָר שֶׁהָיָה עוֹשֶׂה לוֹ אַף אִם לֹא הִלְוָהוּ, וּבִלְבַד שֶׁלֹּא יְהֵא דָּבָר שֶׁל פַּרְהֶסְיָא (ק"ס).
(8) The lender must take care not to derive any benefit from the borrower without his permission as long as his money is in the borrower's hands. [This applies] even if it is something that he would have done for him had he not lent him [money], because since he benefits without permission, he (the lender) seems to be assuming that because his money is in (the borrower's) hands, (the borrower) will forgive him. But, when he benefits from him with his permission [then], it is permitted, provided it is something that he would have done for him even had he not lent him money. Another provision is that it is not widely publicized.7To summarize: there are three requirements that enable the lender to derive benefit from the borrower while the money is yet on loan: 1) he must first receive permission from the borrower, 2) it must be a favor that the borrower would have done even if the lender had not lent him money, 3) it must be a favor that is not widely publicized.
When people assist each other, they are uniting through their act of kindness. One who takes interest acts in the opposite manner, taking advantage of his fellow Jew’s misfortune in order to enrich himself. It is for this reason that throughout the generations Jews have scrupulously kept the prohibition of ribit, and Jewish communities generally set up interest-free loan organizations. (Chabad.org)