Only lend money you could live with never seeing again. Then the friendship isn’t the collateral.

Lending to a friend turns the friendship into the thing that guarantees repayment, and that is a terrible job to give it. Every time they do not pay, the debt sits in the room, and you both start managing it instead of talking. Deciding in advance that you can live without the money takes the friendship out of the deal. What you are protecting is not the cash.

Before you hand anything over, pick the amount you would be fine never getting back and lend only that. Say it is fine either way and mean it. If the number they need is larger, the honest answer is no.