Corporations and Partnerships with Respect to Ribbit

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Partnership of Jews and non-Jews

  1. It is forbidden to charge or take interest from an individual Jew or group of Jews. Some poskim allow borrowing or lending on interest to a partnership of Jews and non-Jews if the non-Jews comprise at least half of the group to which one is lending or from which one is borrowing.[1]

Corporations

  1. Some poskim say that it is permitted to lend or borrow on interest from a corporation even if it is owned by Jews because halacha views the corporation as a dummy entity that isn’t Jewish. Others say that it is only permitted to lend on interest from the corporation but not borrow on interest from them, while others still forbid both borrowing and lending with interest from a Jewish corporation.[2]

Non-Profits

  1. Money that belongs to orphans who aren’t bar or bat mitzvahed can be lent with rabbinic interest[3] but not Biblical interest.[4] This is the practice.[5]
  2. The is permitted to collect the rabbinic interest even if it is collected after he is bar or bat mitzvahed as long as it was arranged beforehand.[6]
  3. If the orphan’s money was indeed lent with Biblical interest, if the borrower invested and in fact made as much as the percent interest that was demanded he needs to pay it.[7] Some say that he only needs to pay it if he made twice as much as was demanded.[8]
  4. Money that is designated for talmud torah, poor people, or a shul can be lent with rabbinic interest.[9]
  5. Some say that it is permitted to lend money with rabbinic interest in order to have money to spend on a Shabbat meal or Suedat mitzvah.[10]
  6. This leniency does not apply to money designated for a tzedaka unless it was given to a charity and is in the domain of the charity.[11]
  7. Charity that is designated for an individual poor person can be lent with rabbinic interest.[12]
  8. Can you lend money with rabbinic interest to spend that money for a mitzvah? Some poskim hold that it is forbidden,[13] while others hold it is permitted.[14]
  9. If a power of attorney or agent lent money of orphans with interest on their behalf and they already took that money the power of attorney or agent doesn’t need to pay it back and the orphans as well can keep it.[15]

Sources

  1. ↑ The Shoel V’Nishal (Mahudra Kama 3:31) writes to Rav Shlomo Ganzfried, author of the Kitzur Shulchan Aruch, that he held that it was permitted to borrow or lend with interest from a partnership between Jews and non-Jews. He thought that since the partnership signs under the title of an entity and not individuals it is permitted according to Rashi and those who hold that lending on interest through a messenger is permitted. Further, even according to those who argue with Rashi, he thought that it was permitted if there are non-Jews in the group so that the Jews can say that they only profited from the non-Jewish borrowers and not the Jewish borrowers. Rav Yitzchak Schmelkes in Beis Yitzchak (v. 2 Kuntres Acharon no. 32) qualifies the Shoel V’nishal’s permit to cases where there are a majority or at least half non-Jews. Mishneh Halachot 6:145 and 13:130 permits borrowing or lending from banks that have a minority of Jewish shareholders because the Jewish shareholders don’t have a say in how the bank runs. The Maharam Shik YD 158 argues with the Shoel V’nishal’s logic; see there for his leniency with other conditions.
  2. ↑ Igrot Moshe YD 2:63 thought that the prohibition of borrowing with interest does not apply to a corporation. Since no one person has personal liability for the loan, the corporation may pay interest. He based this contention on the opinion of Rabbenu Tam (cited by Tosfot Ketubot 85b) who says that there are two types of indebtedness: a lien on one’s property and a personal one. Rabbenu Tam holds that if a person forgives the borrower and relinquishes the personal lien even if there still is a property lien that was sold to another person, that property lien automatically falls apart. Accordingly, one may receive interest from a bank or invest in bonds or stocks of a corporation, though one still would not be allowed to borrow from a corporation.
    Maharshag YD 3 brought a proof that there is no biblical ribbit to charge a corporation interest from the Gemara Gittin 30a that permits giving money in advance to a kohen so that the next time a person has a crop he can take off Trumah, sell it to kohanim, and then the proceeds are effectively given to the kohen and used to pay off part of the debt so that the owner can keep the proceeds of the sale. The gemara explains that even though there is a rabbinic prohibition of interest to pay in advance for food that hasn’t grown and there’s no market price, here it is permitted since the kohen borrower has no real obligation to pay out of pocket according to the original stipulations. The Chelkat Yakov YD 66 grapples with the Rogachover and Maharshag but ultimately says that it is forbidden rabbinically even though there is a good logic to permit it. Rav Zalman Nechemya Goldberg (Shiurei Ribbit p. 8) questioned the proof of the Maharshag because the risk factor that the debtors won’t pay the bank isn’t as great as the risk that a field gets ruined. Minchat Shlomo 1:28 argues with Rav Moshe and isn’t lenient in either direction. Lastly, Rav J. David Bleich in Netivot HaHalacha v. 2 p. 191-4 disagrees with Rav Moshe that it is impossible to have a shiybud nechasim without shiybud haguf. If there exists a shiybud it also applies to the guf even though there is some external conditions which make it impossible to collect from the shiybud haguf.
  3. ↑ Gemara Bava Metsia 70a concludes that it is only permitted to lend money of orphans as interest if the interest is only rabbinic but not if it is Biblical. This is accepted by the poskim and Shulchan Aruch Y.D. 160:18.
  4. ↑ Although it was clear from the Bavli Bava Metsia 70a it is forbidden to lend money of orphans with Biblical interest, the Maharil responsa 73 cites a practice to do so and justifies it based on the Yerushalmi Sanhedrin 7. However, the Maharil concludes that the practice is completely invalid and should not be followed. The Rama 160:18 cites the maharil that this practice was completely rejected. Shach 160:27 adds that there’s no such practice any more as it was wrong. See Yabia Omer YD 5:13 who cites many rishonim who did explain that the yerushalmi held it was permitted.
  5. ↑ Even though the Shach 160:19 writes that the practice was not to lend orphan’s money with any interest even rabbinic interest, the Nodeh Byehuda YD 40 writes that the practice is completely justified based on the majority of rishonim and Shulchan Aruch. He testified that he did so personally. Pitchei Teshuva 160:20 cites the Nodeh Beyehuda. Chelkat Binyamin 160:200 agreed.
  6. ↑ Pitchei Teshuva 160:23 citign Mishna Lemelech
  7. ↑ Shulchan Aruch Y.D. 160:19. The Rashba responsa 2:174 writes that if the orphan’s money was lent with Biblical interest it must be returned like any case of interest. However, the Maharil responsa 37 tries very hard to allow the orphans to keep it. The Maharam prague edition 969 has another justification.
  8. ↑ The Bet Yosef 160:19 writes that even according to the Mordechai 332 and Maharam’s leniency that we view the loan with interest as though it was an investment (iska) that is permitted it is at most viewed as an iska transaction. Therefore, since in an iska half of the profits go to the investor the orphans only deserve have of the profits made up to the amount of the percent that they demanded. However, the Mahara Sason 162 argues that the lender has to pay all of his profits to the orphans and not just half. The Shach 160:32, Chachmat Adam 130:10, and Chelkat Binyamin 160:215 cite this dispute and do not offer any resolution.
  9. ↑ Shulchan Aruch 160:18. The Rosh, Tur, Rabbenu Yerucham, and Rashba apply the leniency of lending orphan’s money with rabbinic interest to other cases of mitzvah such as talmud torah. The Shulchan Aruch codifies this opinion.
  10. ↑ Pitchei Teshuva 160:22 citing the Bear Yakov, Yalkut Yosef 253:4
  11. ↑ Chelkat Binyamin 160:195 based on Mishna Lmelech
  12. ↑ Chelkat Binyamin 160:196 quotes the Bet Yosef within the Rashba says that lending charity with rabbinic interest is only permitted if the money isn’t yet designated for one poor person. However, the achronim hold that it is permitted as long is it is designated for the poor and even an individual.
  13. ↑ Mishna Brurah (Shaar Hatziyun 242:15)
  14. ↑ Chazon Ovadia Shabbat v. 1 p. 9 writes that it is permitted to lend money with rabbinic interest in order to spend it for a Shabbat meal or seudat mitzvah. This is based on the Magen Avraham 242:2 who says that it is permitted to lend with interest in order to spend for a Shabbat meal.
    • Yerushalmi Sanhedrin 8;2 establishes that it is permitted to lend with interest in order to have money for a meal of a mitzvah such to establish the kiddush hachodesh. Shibolei Haleket 55 applies this also to Shabbat meals. What type of interest is permitted for a mitzvah? Or Zaruah Tzedaka 30 explains that even Biblical interest is permitted to further a mitzvah. Mordechai b”m 287 cites Rabbenu Shmuel who agrees. This opinion is cited in the Aguda b”m 4:73, Maharil 37, and Hagahot Maimoniyot (kushta edition, malveh 4). Mahara Ben Tauba cited in Tashbetz 34 agreed. However, this opinion is rejected by the overwhelming majority of poskim as is evidenced by Bet Yosef 160:18.
    • Maharam (krimnoa edition 109) holds that it is forbidden to lend money for charity with Biblical interest but it is permitted to lend them with rabbinic interest. This is also the opinion of the Rosh responsa 18:8, Rashba responsa 4:232, Shulchan Aruch 160:18, and Gra 160:43. Radvaz 6:2306 writes that everyone holds that rabbinic interest is permitted for charity.
    • Magen Avraham 242:2 cites the Shibolei Haleket that it is permitted to lend with interest for a Shabbat meal. The Netiv Chaim explains that this means borrowing with interest from a non-Jew. However, Rav Ovadia (Chazon Ovadia Shabbat v. 1 p. 7) argues that there is no prohibition to borrow from a non-Jews with interest (Rambam Malveh 5:2). Shulchan Aruch Harav 242:9, Rav Shlomo Kluger in Chachmat Shlomo 242, Kinyan Torah 7:20, Bear Yakov 242 cited by Pitchei Teshuva 160:22, and Chazon Ovadia all hold that it is permitted to lend with rabbinic interest in order to get money for the meals of Shabbat. Shevet Halevi 2:64:1, 8:189 seems also to support this opinion.
  15. ↑ Shulchan Aruch 160:20
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