At some point in your relationship, your partner will fall seriously broke and ask you for a loan. Should you give him the money rather than lend it? Should you ask for interest? Should you have a written agreement stipulating the terms and conditions of the ‘loan’? And if he doesn’t pay you back, can you write it off or should you demand it back? Let’s take a look.

Financial responsibility

Before you part with any amount, evaluate how financially responsible your partner is. How does he use his money? If he is not financially responsible, you may choose not to lend it to him. “If he is not financially responsible, chances are that he’ll waste the money or won’t be able to pay it back,” says Moses Mukua, a personal finance coach.

Reason for borrowing

Establish whether your partner has a valid and urgent need that requires a loan. This should help you decide whether to lend it to him or not. “Does he need a soft loan to gamble, take a vacation or even invest in projects that never break even?” poses Mukua. If you don’t feel comfortable with his reason for borrowing, do not hesitate to turn him down.

Other borrowing avenues

Ask your partner if he has tried to get the money from other lending channels such as his bank. According to author and marketing consultant Jacqueline Curtis, chances are that your partner may already be in deep debt and doesn’t qualify for a bank, sacco or chama loan. “You should also make it clear that if you’re going to consider lending money, you’ll require full financial disclosure,” she says.

Don’t stretch yourself

Do not feel pressured to say yes. And if you do not have the money, do not be tempted to apply for a bank loan to show him that you love him. Ask yourself why he won’t borrow from his bank or why his bank finds him credit unworthy. Also, always lend only what you can afford.

When you decline

Do not be too rough on him or her if you decide not to lend. Bear in mind that in relationships, money is a very sensitive subject. Have a mature, firm and clear conversation on why you aren’t able to extend the loan. You can say, simply and clearly: ‘I am sorry, but I don’t have the money,’ or ‘I’d love to be of help but I don’t have the money right now.’ Do not make promises of lending once you get the money or hint that in future, you will be in a position to lend.

When you lend

If you decide to lend your partner the money, be clear that it is a loan and not a gift. If the amount is considerably big, you may want to have it put on paper. Do not feel ashamed or succumb to emotional manipulation to ‘just give him the money’. Also, bear in mind that your partner may very well default on repayments. “Even the most well-meaning loved one might fall on hard times and default. Ask yourself whether you’re okay with that,” says Curtis.