How to Lend Money to Family or Friends –┬áBefore giving a loan to a loved one, consider these rules to preserve the relationship … and take care of your finances. When a friend or family member borrow money from you, you must first ask yourself why he or she is asking you for it and not someone else. They are likely to think that your business will generate significant profits, or maybe it’s because you’re going to create a first at home or in a new car. What they do not see is your line of credit or your profit margin is really very low. If a beneficiary of a loan to a family member or friend may seem like a better idea to give a loan immediately, the situation may get worse if something goes wrong. As the recipient, you are legally bound by the debt. If the debtor does not pay or leave the city, you keep all the payments, with a negative number for your story and friendship in pieces.