Business Capital Financing in a Sharia Cooperative: An Islamic Economic Law Analysis of Administrative Fees, Profit-Sharing, and Late-Payment Penalties in Luwu, Indonesia

Abstrak

This study examines the business capital financing system implemented by Bakti Huria Sharia Cooperative, Belopa Branch, Luwu Regency, and evaluates its conformity with Islamic economic law. The study responds to a practical problem frequently found in sharia-labeled microfinance institutions: financing is promoted as profit-sharing, yet members experience administrative deductions, predetermined repayment additions, collateral requirements, and monetary penalties when installments are delayed. Using a descriptive qualitative case-study design, data were collected through interviews with cooperative managers and members, direct observation of service procedures, and documentation of membership, financing, and repayment practices. The findings show that the cooperative has established orderly membership and financing procedures, including identity verification, business information, collateral documentation, and installment schedules. These mechanisms support administrative discipline and risk mitigation. However, the sharia compliance of the financing system remains partial. The pillars of mudharabah are formally present because the cooperative acts as capital provider and the member acts as business manager, but the substance of the contract is weakened when the return is treated as a fixed additional charge rather than a genuinely agreed profit-sharing ratio based on realized business results. Administrative fees may be permissible only when they reflect actual service costs, while late-payment sanctions must be limited to solvent members who intentionally delay payment and should not become cooperative income. The study concludes that the cooperative should clarify contract nomenclature, separate real administrative costs from margin or profit components, improve member literacy, strengthen the role of the sharia supervisory function, and document the allocation of any penalty funds for social purposes. These findings contribute to the governance of Islamic microfinance by showing that sharia compliance requires consistency between contract form, financial substance, and member protection.