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Money Matters with Nimi Akinkugbe: Should You Lend Money to Friends?



Shakespeare’s Polonius offers the sage advice to his son Laertes in Hamlet; “Neither a borrower nor a lender be, for loan oft loses both itself and friend“.

Consider this scenario: A friend calls you and needs to see you urgently. It can’t be discussed on the telephone; she must visit you personally. You oblige and she explains that she has run into serious financial difficulty and requires a sum of N50,000 immediately to assist with her rent. She is expecting some money that she is being owed and promises to pay you back within two months.

You are touched by the sorry tale and oblige. She blesses you and visits your home early the next morning to collect the cash. Then, you don’t hear from her for several months. You call and she doesn’t answer her phone, or respond to text messages and she totally disregards your e-mails.

After many months, you see your “friend”. When you ask her why she hadn’t returned your calls, she says, “Oh, you know the network has been so bad, I kept trying your number and then I lost my phone and all my numbers”. We all know that such excuses hold no water; your friend is just avoiding you like the plague, because you lent her money! She has bought a new car, whilst yours is long overdue for a change; friend has gone on holiday to Dubai, and had the party everyone is talking about. Another year passes and you’ve seen her several times at social occasions and the debt has never again been mentioned. Sound familiar?

No matter how much you lend to friends or relatives, whether it is N500 or N500,000, it is reasonable to expect to be repaid. You lend the money because you trust the person to keep their word. Money “palaver” breaks up or at the minimum can strain relationships. Sometimes, trying to collect it can breed awkwardness, resentment, guilt, and anger. It isn’t that lending money is the problem per se; it is that money changes the nature of personal relationships. However, a loan to a friend does not always have to result in the loss of both the friendship and the money if a few issues are considered.

It is nice to be able to help out a friend or loved one faced with a health crisis or other medical emergency, death of a family member, a job layoff, divorce, a new business venture or to assist with their rent or children’s school fees. You should know what the money is needed for. If it is a sudden illness or calamity or other serious need, then you should probably consider. After all, that’s what friends are for. Think twice before supporting an indulgence.

Can you afford to lend it in the first place?
Do you realise you are likely to get back only the principal with no interest? If your friend ran into difficulty and couldn’t pay you back, will this put you in financial difficulty? Unexpected events occur that could mean that you need money in a hurry. Can your own emergency fund accommodate your unexpected need as well as your friend’s crisis?

Is it a loan or an investment?
If your friend is starting a new business, is this money an investment in the business and buying you shares in the business or do you expect to get your money back in full? Are you comfortable with the risk and is there formal documentation in place?

How much should you lend?
You must decide what you consider to be a substantial sum. Remember most experienced borrowers approach several people at the same time and can end up raising a tidy sum. Don’t play Father Christmas. You don’t have to put up the entire amount; a percentage would help.

Don’t be too casual about lending money
Even though it can be embarrassing, it’s always best to agree a repayment plan in advance. Smaller amounts can be lent without any documentation but for larger amounts, a promissory should include details such as the name of the lender and borrower, the loan amount, date, interest rate if applicable, schedule of repayment and both signatures. For substantial amounts, you may want to consider legal advice.

Once you agree to loan the money, try not to make your friend feel obliged to you, as this can put a strain on the relationship. It is no longer up to you how it is spent. Don’t change the way you treat the recipient, don’t expect special favours from them or change your personal expectations of them. Be discreet; the last thing your friend wants is for you to publicize the fact that you lent them money.

Should you charge interest on a loan to a friend?
It depends on the amount of the loan. If the loan is for a significant sum, you may wish to charge interest at least equal to the applicable Federal Govt Treasury Bill rate, which will vary according to the length of the loan. You are not trying to exploit a friend, but this can serve as a guide. However, today’s rate that may make your friend run!

Is there a repayment proposal?
It is only decent for an initial request to come with a repayment proposal. If a borrower doesn’t mention how they intend to pay you back, that should raise a red flag. What’s their track record like? Are they constantly borrowing? Don’t get caught out by a notorious borrower.

Don’t feel guilty
If you cannot afford to part with any money at this time, or feel uncomfortable about it, just say no. Sometimes borrowers can make you feel so guilty that you succumb to the pressure. It’s far easier to say ‘no’ from the start than to have to hound your friend for the money.

Give, instead
Borrowing and lending money are business transactions and should generally be treated as such. If this all sounds too formal for you, then it’s best to just steer clear of lending. Give, instead. If you consider the loan to be a gift, if it gets paid back, then it’s a pleasant surprise, if it doesn’t, you weren’t expecting it back, anyway.

If you are always on the borrowing end, do remember that ultimately it is your credit behaviour and credibility that will make it possible for you to approach friends and relations to support you in your business venture or other need. Don’t abuse the privilege.

Photo Credit: Gaudilab | Dreamstime

Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. You can reach Nimi via the following: Email; [email protected] | Website: | Twitter: @MMWITHNIMI | Instagram: @MMWITHNIMI | Facebook: MoneyMatterswithNimi


  1. mama zee

    August 7, 2017 at 11:53 am

    Several times has this loaning a friend/family money landed me in a mess and i just made yet another vow ytday that come rain or sun i wont lend again! I called my sister on saturday to tell her i needed the money[ i gave her in May that she was supposed to pay back the next week] after i had explained i haven’t been paid in 2 months and it was taking its toll on me cos i had to take my kids to the salon n make my hair too n all that and she just sent me half the money after two months and was very unapologetic about it. and this was after i had to ask her colleague if they had been paid if not she’ll tell me they haven’t paid her too! i no do again abeg.#venting

  2. Ruth

    August 7, 2017 at 12:04 pm

    Do not ask, do not give. Simple

    • Ephi

      August 7, 2017 at 3:46 pm

      Asa, don’t let users use you. Some people whom we call friends are simply users. I would advice you to put your money in long term / inaccessible investments such as T-bills or stocks, and simply tell them your money is tied up, so although you would love to help, the cash is not available.

      Also set up an auto debit that will take a fixed amount from your account automatically to a savings or investment account. The less money you have at your immediate disposal the less likely of lending people money here and there.

      The last thing I recommend is you can put aside a small amount each month strictly for lending, and let it build up. If anyone asks for money, take it from that built up amount which would also be your max limit. It’s good to give/lend but must be done with sense.

      Always remember that these people may not be there for you if things go south so you have to look out for yourself. Apologies for the long epistle.

  3. Asa

    August 7, 2017 at 12:16 pm

    When I am broke, I hardly know who to beg for money. I consider some friends and unconsider them. I ask a few and I don’t get. In the end, I sit down quietly and wait it out. Thank God for steady job, at the end of the day, salary must come.

    When other people are broke however, I seem to be the best person to call. I am on everybody’s goto list. Close friends will call. Not so close friends will call. Even people I am just seeing for the first time in the year will call. Stupidly, I don’t know how to say no. The last amount of money I loaned will put me in a difficult position if it is not paid back. Na pray I dey pray make the collector no talk rubbish. Although I made her promise and promise. One time I was broke, I begged for money, no one gave me, then my office gave me money that I was supposed to travel with. The day I got that money, a friend begged for money and I gave him from the travel allowance I had just been given.

    I don’t know if someone has cursed me o. I feel like some of my friends use me too. 2 different people owe me a total of 90k and one has owed me for over a year. She’s not even talking of payback again and I don’t know how to hook her. I need an article on excuses to give instead of lending a friend money. People know how to say no to me, na me no sabi talk no,

    • Paki

      August 7, 2017 at 3:05 pm

      You are not cursed. You’re just silly. Alarm never hook you. Dey dere dey look.

    • LemmeRant

      August 7, 2017 at 3:08 pm

      This your story. Be like say them curse you o.

      I can only loan proven and trusted people money, mostly people I know can pay back in the first place. That’s when somebody will go an carry my money for MMM or bet9ja. Money wey I dey manage hustle.

      For the first timers, I can’t loan anything that will inconvenience me. And once you decide not to pay back, that’s it. End of story. I won’t fight you or disturb you but just forget next time, even if the money I gave you is as little as 1k, e-no-mean.

      I make sure I quickly repay people I collect money from and I never take what I can’t pay back. They don’t have to remind me. I just hate owing people.

      Notice I didn’t use either “borrow” or “lend”

    • Ephi

      August 7, 2017 at 3:47 pm

      I replied to the wrong comment but it was yours I was referring to.

    • Dee

      August 28, 2017 at 8:59 pm

      @Asa, your own better pass sha.
      Been learning how to say no, but let someone just come with their story na all the excess wey dey my hand I dey drop.
      What i do now is, once alert enters, 30% goes into an investment account. Anyone wey come with story now, am always happy to show them my dry account balance.

  4. Moving on Swiftly

    August 7, 2017 at 12:45 pm

    Hmmmm…, Story of my life! Not just friends. Sisters nko or family members.

  5. marvel

    August 7, 2017 at 12:54 pm

    if I had seen this earlier, I would have made better decisions about lending/borrowing..
    it great I know now..berra late than never.

  6. Spunky

    August 7, 2017 at 1:32 pm

    I don’t lend money. Abeg, I no fit shout…I give what I can to support you especially if its worth it.

  7. Paki

    August 7, 2017 at 3:10 pm

    Story of my life be4. Ppl will borrow money frm me 2 sort out deir personal ish n den travel abroad, shop for luxury tins n return. still without paying me o. I had 2 learn de hard way. Now ask me for moni na stori stori u go hear coz me 2 am managing myself.

  8. Adabekee

    August 7, 2017 at 3:26 pm

    Me I’ve learnt the hard way. Now I just give what I can to support but never the full amount requested. Most borrowers I’ve come across are so entitled.

  9. Xyz

    August 8, 2017 at 12:26 pm

    According to my sister, the fact that someone comes to borrow money from you means their current income/lifestyle is not able to sustain them. What then makes you think they’ll suddenly have more than enough to pay you back next month or next two months.
    Just recently I have had to let go of two loans cos at the end of the day it was still my airtime and fuel money I was using to chase them up and down. Just sad.

  10. Sandra

    August 18, 2017 at 11:57 pm

    To start with I don’t even understand how people borrow people and just don’t pay bk when they say they will or even call to explain themselves. Am still dealing with that and then again people who are constantly borrowing money. This group of people amaze me. I Lent someone money over 3 three months and she said that month that month till today no feedback no headway. In my head there’s always another time!!!

  11. Adeyeye Abel Ayobami

    November 18, 2017 at 4:11 am

    How do you think bank and other financial institutions survive the tightfisted borrowers and grow multi-bilion industry around the globe? Ordinarily, there is no bad loan, only bad lenders are out there. If you are to lend your hard earned money to anyone including friends and family, make sure all the 5cs are there. Don’t even compromise on one of them and your money will be save all the time.

  12. Wonder

    March 26, 2018 at 2:32 pm

    Wow. I’m sorry to sound harsh but it seems you don’t like yourself. You should invest in your future and that of your kids (if you plan to have them), not playing Santa to everyone else. Please simply tell your friends (after their request): “Oh, so sorry about that but right now, I’m really not in a position to assist you. I’ve got so much on my plate that I’m dealing with. I’m so sorry.” It’s that simple. You’re not lying. You’re just unable to help.
    By the time you’ve said “No” 4 times, you’ll become a pro.

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