The ruling on taking a Loan from forbidden Money

Question :

Is it permissible for me to borrow money from a person whose business is known to be forbidden and he deals in forbidden matters?

Answer:

My brother, you should not take a loan from this person or deal with him as long as his transactions are in that which is forbidden and he is known for forbidden transactions of Riba or anything else. You should not deal with him and you should not take a loan from him. Rather, it is obligatory upon you to stay clear of that and avoid it. However, if he deals with that which is forbidden and that which is not forbidden, meaning his dealings are mixed, containing both good and evil, there is no harm in dealing with him. Yet, it is better to avoid dealing with him due to the Prophet's statement:
"Leave that which causes you to doubt for that which does not cause you to doubt."

And his statement:
"Whoever avoids the doubtful matters, then he has made himself blameless in his religion and his honor."

And his statement:
"Sin is that which wavers in your soul and you do not like for the people to know about it."

Thus the believer avoids the doubtful matters. So, if you know that all of a person's dealings are forbidden and that he does business in that which is forbidden, then this type of person should not be dealt with and money should not be borrowed from him.

Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 3 Pages 424-425

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