Question: “Is it okay for Christians to charge interest, especially in business loans?” R in Virginia
My Answer: The question of whether or not a Christian should charge interest on a loan is one that has been debated in the church for quite a long time. The Bible does speak to this issue in a number of places. The matter basically turns on how one is to interpret the relevant passages of Scripture. Opinions vary from those who believe that it is absolutely wrong for Christians to charge any interest at all, to those who assert that it is okay to charge interest of non-Christians but not fellow believers, to those who believe it is okay as long as the interest is not exorbitant or unfair. What are we to make of this issue?
As noted, the Bible deals with this matter in a number of places—most prominently in the Pentateuch, but also there are references in the Psalms, Proverbs and the Prophets. Some of the most significant passages are Exodus 22:25-27, Leviticus 25:35-36, and Ezekiel 18:8-17. To address this issue we have studied these passages, considered the meaning of “interest” or “usury” in the original Hebrew, read a number of commentaries regarding these scriptures, examined several Bible reference books, and researched various writers and their interpretations of this issue. The following is a summary of our findings.
1. Most of the passages dealing with interest are addressing the topic within a specific context, i.e., helping the poor. This is very significant. These passages are not dealing with general business practices or commercial ventures. They are dealing with those living in extreme poverty who ask for loans to help in a desperate situation. In this regard consider Exodus 22:25-27, Leviticus 25:35-36, Proverbs 28:8 and Ezekiel 18:8, 17 and Ezekiel 22:2.
It helps to keep in mind that ancient Israel was an agrarian society. Most transactions, whether personal or commercial, involved barter of livestock, produce, etc. Money was not commonly used for most transactions. However, if someone had experienced a major setback in life, or some great tragedy had happened and the person had become destitute, their unusual circumstances may have necessitated borrowing money to help alleviate their indigent situation.
It is the passages noted previously that are usually cited as evidence that Christians should not charge interest. However, it must be stressed that what is being addressed in these passages is not a matter of what should be considered normal business practice, but how to deal with the poverty-stricken. The issue is not commercial enterprise, but mercy and compassion for the needy. The Mosaic Law basically enjoins us to be kind to the poor, but is not here giving instruction about the proper way to handle business procedures.
2. The terms used in the Old Testament are important to consider. There are three words that are translated “interest” or “usury,” depending on the translation. The first two are tarbith and marbith. Both of these terms are derived from a word that means “to increase.” The idea is that of adding to the original loan, increasing the amount to be repaid, hence “interest.” This type of interest does not seem to have the same negative stigma as the third term. However, if a person charges tarbith or marbith that is excessive, abusive or unfair, especially to the poor, then this is considered sinful and unrighteous.
The third Hebrew word is neshek. This is a fascinating word. It is derived from a verb meaning “to bite.” Thus, neshek is a “biting interest.” Hebrew is a language of imagery. The word-picture here is of interest that is like a viper, it bites into the livelihood of the debtor. Many scholars see neshek as indicating excessive or unfair interest. Some even see it as referring to compound interest. The latter sense would be interest that is structured in such a way that it continually bites the debtor, eating away at his life, and he is not able to actually pay down the loan, i.e., reduce the principal in a fair manner.
The very image of neshek is of something abusive, cruel and unjust. Thus, if interest is charged as a normal business practice, the godly person must be sure that it is fair, equitable, and not debilitating to the debtor.
3. What about the references to making a loan to a “fellow Israelite”? For references in this regard see Deuteronomy 23:19 and Psalm 15:5. It is Deuteronomy 23:19 that is often used to assert that a Christian should never charge interest to another Christian believer. This approach would be based on this injunction to not charge interest to a “brother.”
However, to properly understand this biblical command we must once again consider the historical and cultural context. As noted previously, ancient Israel was an agricultural society. Their tribal and family lands were apportioned to them by God. The sociological and economic structure of their society was designed so that by living on their own land, within their own tribal regions, all of their needs would be provided by the land itself. Thus, commerce was simple and friendly. There would be little need for borrowing, anything. If a person had to borrow, it was likely because of some disaster or serious tragedy, such as the death of the head of the family or a major crop failure. Thus, for a person to be in need of a loan of any kind, whether money or food, would indicate that they were in desperate circumstances.
With this understanding, we see that the idea of the poverty of the debtor is implied even in this verse. Borrowing was not usual for the Israelites. Only the poverty-stricken would need to borrow. This is probably why this verse specially mentions loaning food, as well as money, without interest. Once again, the real issue is being kind to the poor, not defining any business procedure.
Indeed, this is further emphasized by the next verse, 23:20. Here the Lord says that it is permissable to charge interest to a foreigner, someone who is not an Israelite. This type of transaction would not be a “family affair,” but instead a purely business nature. Here we are dealing with trade and commerce. This would seem to indicate that it is one thing if we are loaning money to help the poor, but a commercial transaction is a different matter all together.
4. It must be noted that most commentators and Bible scholars, whether older or contemporary, agree that what is being prohibited in the Old Testament is not interest of any kind, but interest that is excessive. Although there are a very few exceptions to this view. However, this writer has examined over two dozen different reference works—commentaries, Bible dictionaries, lexicons, reference Bibles, various translations—and found this to be the majority opinion by far.
5. The New Testament has little to say about interest. But the few instances that exist are instructive. First of all, Jesus taught His followers to live by a code that is beyond what is usually expected, even of morally righteous people. We are to love our neighbors, but also our enemies. This type of radical love also means that at times we should give and/or lend without expecting anything in return (see Matthew 5:42 and Luke 6:35). However, this refers not just to loaning without interest, but to giving and loaning without expecting anything in return.
It must be stressed here that the Lord is again not laying out a business strategy. He is dealing with interpersonal relationships. If we were to apply this principle to commercial transactions, then banks and lending institutions run by Christians should loan money with no expectation of being paid back at all.
6. Jesus does touch on the matter of interest in a couple of His parables. In the Parable of the Talents (Matthew 25:14-30) and the Parable of Minas (Luke 19:12-29) Jesus presents the same analogy in two slightly different versions. Of course, in both parables Jesus is teaching spiritual principles through a financial/commercial illustration. In both parables those entrusted with a monetary amount were expected to be wise stewards and increase the investment of their master. In each case, the fearful and foolish servant did not bring any increase to his master. We understand this to indicate the way in which we are to use all that the Lord blesses us with in life—our skills, giftings, possessions, time, finances, etc.—for His glory and the expansion of His kingdom.
Although the application of this parable is primarily spiritual, it is interesting that Jesus used a financial analogy to convey His message. In the case of the faithful servants, they increased their master’s accounts, apparently through wise investments. The increase of finances is seen as a righteous act. But the unfaithful servant showed no increase for his master. The master rebukes this servant by pointing out that the initial amount of money could have at least been placed on deposit and earned interest. As we hear Jesus say this, there is no indication that earning interest is in anyway unrighteous or inappropriate. Indeed, it seems normal and accepted.
Let’s review what we have considered.
1. The passages dealing with interest are focused on dealing with the poor; thus, the main issue is one of kindness to the poor.
2. The Israelites rarely used money, and would normally only require a monetary loan in cases of extreme destitution.
4. These Bible verses are not primarily concerned with business practices.
5. When there is a reference to business practice, as in the case of a foreigner in Israel or the servants in the parables, charging interest is not only allowed but encouraged.
6. If interest is charged, the Bible is clear that it should be a fair and just amount. Abusive, exorbitant or debilitating interest is unrighteous and offensive to God.
To summarize, the Scriptures indicate that there is a clear distinction between personal transactions and commercial investments. For example, there is a true difference between giving a poor man a financial gift, or even loaning him money with no interest charged, and making that same person a business loan to begin a commercial enterprise.
In addition, as regards a personal loan, especially to someone who is poor and in great need, the believer should always be merciful and compassionate. We cannot forget that forgiveness of debt is presented to us as an example of virtue, and illustrates the manner in which God has forgiven us. Further, if we were to make a mistake in this area, it would always better to err on the side of love and mercy. Finally, it would be better to be wronged than to wrong, even in financial matters.
Our conclusion would be that it is permissible for Christians to charge interest in a business venture, even of other Christians, as long as it not of an excessive or unjust nature.