Mr Cohen's textile business is in dire need of $100,000 working capital. So Cohen approaches Mr Mamon, a wealthy Jewish businessman. Mr. Mamon is prepared to lend Mr Cohen the money but would like to earn 10% interest on the loan and receive back $110,000. But this is not possible because Mr Cohen and Mr Mamon would be in violation of the prohibition against paying and receiving interest. Does this mean that Mr Cohen’s business must fail? No, it does not.
Jewish religious law strictly prohibits the paying of receiving of interest on loans made between Jews. However, when monies are advanced in the course of a business transaction an agreement may be entered into, whereby the provider and receiver of these funds are considered equal partners.