Is there anything more uncomfortable than having a friend ask you for a loan? While a few bucks here and there is never an issue, when someone comes to you needing a large sum, things can get awkward fast if you don’t know what to do. On the one hand, you want to be a generous person and a good friend. Conversely, you’re also acutely aware of the fact that lending money is a risky move that can lead to stress, ongoing problems and, at worst, a lost friendship. To avoid the moral angst of having to figure out how to navigate a potentially tricky situation, keep the following simple points in the back of your mind.

1. Talk it out first

While you obviously want to help your friend, it’s worth keeping in mind that bringing money into the middle of any relationship takes it into precarious territory. Before making any decisions, sit down with your bud and find out exactly what’s going on. If they’re experiencing financial hardship, there are non-profits offering no interest loans for which they can apply online. A solution like this allows you to help your friend while also keeping debt out of your relationship, which is the safest bet in the long run. 

2. Only give under this condition

If the interest-free loan isn’t enough to cover what your friend needs, and you really feel compelled to help, ask yourself this question first: “are you prepared to never see that money again?” While the friend in question may be trustworthy and reliable, life throws some pretty gnarly curveballs at people, meaning no-one’s behavior is ever 100% predictable. If you want to lend them money and not have the friendship ruined, you need to be okay with them potentially not paying you back. If this is the case and you have the cash to spare, give freely. Then if they do pay you back as promised, it will be that much sweeter for having been unexpected. 

3. Learn how to say “no” graciously

If you don’t meet the above condition and really would need the money back, for the sake of the friendship, it’s in your best interests to say “no.” However, this is easier said than done. It’s important to remember that this doesn’t make you a bad person, so long as you go about it with kindness and respect. The best way to say “no” to a request for a loan is to be clear, kind, and diplomatic. Don’t be tempted to over-explain as this will just prompt your friend to find ways around your reasons. Instead, something as simple as “I’m not in a position to do that right now” is all you need to say. 

4. Soften the blow 

You may have declined their request for financial assistance, but that doesn’t mean you can’t still help. This is where the first point is crucial. Having let your friend vent about what’s going on, you should have a good understanding of the issue. With this headful of information, it shouldn’t be too hard to come up with a few ways you can help them that don’t involve money. The possibilities will depend greatly on the cause of their problem but may include brainstorming ideas, researching options, babysitting the kids, or helping them with paperwork. 

Being asked for a loan from a friend is undeniably awkward, but there are ways to help that won’t put a strain on your friendship. Keep the above steps in mind, and you’ll be able to sidestep the potential hazards and offer genuine assistance.