Lending Money to Fellow Christians
PEDRO and Carlos were good friends.* They were fellow Christians, and their respective families often enjoyed warm association with one another. So when Carlos needed some money for his business, Pedro did not hesitate to offer to lend it to him. “Since we were good friends,” explains Pedro, “I didn’t mind.”
Just two months later, however, Carlos’ business failed, and repayments stopped. Pedro learned to his surprise that Carlos had used much of the money that he had borrowed to repay nonbusiness debts and to finance an extravagant life-style. The matter was not resolved to Pedro’s satisfaction even after a year of visits and letters. Out of frustration, Pedro went to the authorities and had Carlos—his friend and Christian brother—thrown in jail.* Was this a proper course to take? We shall see.
Disagreements and misunderstandings over money loans are a frequent cause of ruined friendships among people around the world. At times it may even be a cause of discord among fellow Christians. In many lands bank loans are difficult to obtain, so it is common for people in need of financing to approach friends and relatives. The sad experience of Pedro and Carlos, however, illustrates that unless Bible principles are carefully followed by both borrower and lender, serious problems may arise. What, then, is the proper way of handling a request for a loan to a fellow Christian?
Counting the Costs of Borrowing
The Bible discourages unnecessary borrowing. “Do not you people be owing anybody a single thing, except to love one another,” exhorts the apostle Paul. (Romans 13:8) So before taking on debt, count the cost of doing so. (Compare Luke 14:28.) Is there really a need to borrow money? Is it a matter of maintaining your livelihood so as to care for your family? (1 Timothy 5:8) Or is a measure of greed involved—perhaps a desire to live more luxuriously?—1 Timothy 6:9, 10.
Another significant factor is whether taking on debt will force you to work longer hours and perhaps neglect meetings and field service. Also, can you really afford to risk someone else’s money? What if the business or undertaking fails? Remember, “the wicked one is borrowing and does not pay back.”—Psalm 37:21.
‘Speaking Truth’ to Lenders
After considering such factors, you may still feel that a business loan is necessary. If it cannot be obtained through secular means, it is not necessarily wrong to approach a fellow Christian, for it is common to turn to friends in time of need, as Jesus noted at Luke 11:5. Yet one should take pains to “speak truth.” (Ephesians 4:25) Honestly explain all the facts involved—including the risks, even the ones that may seem to be remote. And do not take offense if the prospective lender asks numerous pointed questions so that he can be sure that he has an accurate picture.*
Would it be speaking truth to borrow for one reason and then use the funds for another? Hardly. A Latin-American banker explains: “A bank would cancel your credit, and if you didn’t pay up your debt immediately, they would get a court order to seize your belongings.” If money is lent on the premise that it will increase the profitability of a business, to use it for another purpose in effect robs the lender of his assurance that the loan can be repaid. True, you may not fear legal reprisals when borrowing from a fellow Christian. Nonetheless, “the borrower is servant to the man doing the lending,” and you have an obligation to be honest with him.—Proverbs 22:7.
Applying the Golden Rule in Business
Jesus said: “All things, therefore, that you want men to do to you, you also must likewise do to them.” (Matthew 7:12) How important it is that this rule prevail when we are doing business with a fellow believer! For example, how would you react if a brother turned down your request for a loan? Would you feel that he betrayed your friendship? Or would you respect his right to decline your offer, realizing that he may well need his funds or may assess the risks as more serious than you do? He may honestly question your ability to handle the funds effectively. In such a case, his refusal may very well be both practical and loving.—Proverbs 27:6.
If a friend does agree to lend you some money, details should be spelled out in writing, including how much has been borrowed, to what use the money will be put, what assets are security for the loan, and how and when it will be paid back. In some cases it is even wise to have the contract drawn up or looked over by a lawyer and filed with the authorities. At any rate, once an agreement has been signed, “let your word Yes mean Yes, your No, No.” (Matthew 5:37) Do not presume upon your friend’s goodwill by failing to take your obligation toward him as seriously as you would toward a bank.
What if you are approached for a loan? Much will depend on the circumstances involved. For example, a Christian brother may, through no fault of his own, fall into financial ruin. If you have the means to do so, Christian love will move you to ‘give him the necessities for his body.’—James 2:15, 16.
How unloving it would be to take advantage of a brother’s adversity by charging interest in such a case! Urged Jesus: “Continue to love your enemies and to do good and to lend without interest, not hoping for anything back.”—Luke 6:35; compare Leviticus 25:35-38.
What, though, if you are simply being asked to finance a business venture or to secure a loan? Generally, such matters are best approached as financial investments. The Bible clearly urges caution, exhorting: “Do not get to be among those striking hands, among those who go security for loans.”—Proverbs 22:26.
Such being the case, you must first determine if you really can afford the investment. Will it cause you financial ruin if the business fails or the borrower is unable to pay off the loan on time? If you can afford the loan and profits are to be made, you also have the right to share in them by charging reasonable interest for your loan. (Compare Luke 19:22, 23.) Proverbs 14:15 warns: “Anyone inexperienced puts faith in every word, but the shrewd one considers his steps.” Some normally astute businessmen have thrown caution to the wind when doing business with fellow Christians. The lure of high interest payments has drawn some into reckless investments in which they have lost both their money and their friendships with fellow Christians.
Interestingly, bankers frequently consider three factors in assessing how risky a loan might be: (1) the character of the person requesting the loan, (2) his ability to repay, and (3) the conditions prevailing in his line of business. Would it not show “practical wisdom” to evaluate matters similarly when considering lending your hard-earned money to someone?—Proverbs 3:21.
For example, what is the reputation of the brother requesting the money? Is he known to be trustworthy and reliable or reckless and unstable? (Compare 1 Timothy 3:7.) If he wants to expand his business, has he successfully managed it to this point? (Luke 16:10) If not, practical assistance in managing his money might be more helpful in the long run than lending him money that may be mishandled.
Another factor would be the brother’s ability to repay. What is his income? What debts does he have? It is only reasonable that he be frank with you. Nevertheless, Christian love must still prevail. You might, for example, want to secure the loan with the brother’s salable assets. The Mosaic Law condemned seizing either a man’s means of livelihood or his basic possessions in order to secure a loan. (Deuteronomy 24:6, 10-12) Thus, a South American brother who is a businessman says he will lend only up to half the amount of a brother’s salable assets. “And I don’t consider the tools of his trade or his house a salable asset,” he explains. “I certainly would not want to turn my brother out on the street and seize his house in order to get my money back.”
Finally, you should realistically consider the general business conditions where you live. We are living in “the last days,” during which men are “lovers of money, . . . betrayers.” (2 Timothy 3:1-4) While your friend and brother may be honest, his partners, employees, and clients may not be. As a Christian, he cannot resort to bribery and lying—tactics his competitors may use to their advantage. Also to be considered are the ravages of “time and unforeseen occurrence.” (Ecclesiastes 9:11) The value of merchandise can suddenly drop. Runaway inflation can ruin a business or wipe out the value of your loan. Thievery, accidents, vandalism, and injuries are also unpleasant realities of business. You should consider all these aspects in making your decision.
At times, in spite of all precautions, a Christian is simply unable to repay his loan. The Golden Rule should move him to communicate regularly with his creditor. Perhaps only small payments are possible for a time. Nevertheless, a Christian should not feel that token payments excuse him from making real sacrifices to fulfill his obligations. (Psalm 15:4) A creditor who is a Christian is also obliged to show love. If he feels he has been dealt with fraudulently, he may apply the counsel at Matthew 18:15-17.
Involving the secular authorities, as did Pedro in the case mentioned at the outset, would rarely be advisable. Says the apostle Paul: “Does anyone of you that has a case against the other dare to go to court before unrighteous men, and not before the holy ones? . . . Is it true that there is not one wise man among you that will be able to judge between his brothers, but brother goes to court with brother, and that before unbelievers? Really, then, it means altogether a defeat for you that you are having lawsuits with one another. Why do you not rather let yourselves be wronged? Why do you not rather let yourselves be defrauded?”—1 Corinthians 6:1-7.
There may be some situations—such as involving unbelieving partners, worldly suppliers, or insurance matters—that seem to require settlement in a secular court or by a governmental agency. But in most cases, a Christian would rather suffer some financial loss than subject the congregation to the shame that prosecuting a brother over an unpayable loan would bring.
In most cases such dire consequences can be avoided. How? Before lending to or borrowing from a brother, be aware of the potential hazards. Exercise caution and wisdom. Most of all, “let all your affairs,” including business affairs, “take place with love.”—1 Corinthians 16:14.
The names have been changed.
In some lands bankruptcy and defaulting on loans still commonly result in imprisonment.
Some have borrowed small amounts from many lenders. Each lender, not getting full facts of the whole situation, may think the borrower will easily be able to repay.