How to Lend to A Friend | OneUnited Bank

What you end up setting in place is a friendly understanding more than a formal contract. That way, you can confidently handle any changes or challenges that may arise with a clear understanding of the boundaries of the loan.

Step 3: Explore Non-Cash Options

Sometimes, lending money isn’t the only way to offer support. If a loan feels difficult for you, think about other ways to help that might serve your friend even better:

• Offer Financial Directions: Sometimes the solution isn’t the loan itself but the financial tools for money management. Perhaps a better solution can be found in helping them with budgeting or financial planning. This kind of support often has lasting benefits beyond a quick loan.
• Identify Opportunities: If you realize in your conversations that your friend is perhaps between jobs and would benefit from recurring income, connect them with job leads, resources, or even people in your network. Just like financial directions, valuable connections have a longer lifespan than a loan.

These alternatives show you care about their well-being while sticking to your own boundaries. Plus, they have the added benefit of empowering your friend and helping them invest in long-term, intangible assets!

Step 4: Be Ready for the “What If”

Although you have your plan, before you lend, think about what you’d do if things didn’t go as planned. If the repayment doesn’t happen on time (or at all), are you prepared to let it go? Having considered this in step 1, this is how you can think about it practically:

• Partial Payments: Would you be comfortable with them making smaller, partial payments over time if a lump sum isn’t realistic for a one-time payment?
• Forgiving the Loan: If things don’t go as expected, would you be okay with letting this loan go? Knowing your answer to this ahead of time can help you feel at peace with your decision.

If issues arise, try approaching your conversations with empathy. For example, if payments are delayed, you could start by asking, “What options work best for you right now?” This approach keeps communication open without creating immediate pressure. This mindset allows you to lend without folding to your emotions and helps preserve your bond even if the timeline shifts.

Friend First, Lender Second

Lending money to a friend is an act of kindness and confidence, not a transaction. Although the topic of money is complex it doesn’t have to cloud or complicate your friendship. Approached by both parties with the right intentions and clarity, lending can be a positive experience that helps a friend in a time of need.

Remember, you’re in the driver’s seat with the power to decide: lend or not. Start by checking in with yourself, and ease into a calm discussion before you put your foot on the accelerator. Set clear expectations and boundaries with the intention of truly helping those close to you. #BankWhereYouWantToBe!