If you lent money as a job, you would know that a certain percentage of those loans would go uncollected. In this case lending to family or friends may have an even greater percentage of uncollected money. So ask yourself: How much can you afford to lose? And to keep the relationship, you probably need to have the mindset that whether they repay or not, you love them! You don't want to ruin your family or this precious friendship with bitterness and resentment. So get your mind wrapped around the possibility of the worst-case scenario, non-payment, so you can keep the relationship.

Make it official

Decide terms, such as interest and repayment schedule, and make an official contract. Any time you work with family and friends you want to make sure work stuff is very clear even perhaps more clear and official than you might with others- so that there are no misunderstandings. Work is work and family and friends are relationships that you must regard so highly that special efforts are made to treasure and protect them.

Communicate

Arrange clear and dependable communication with one another. Have an agenda, or some process that is agreeable to both parties prior to lending the money so that family dinners are not where lending issues rear their scary heads.

Every lending and gifting decision is unique. Lending may also need to include financial counseling so that a more stable future can be made for this wonderful person whom you treasure.