At some point in student life, most students will be called upon by a friend - or even a family member - for a loan. In these tough economic times, this appears even more likely than ever. Especially with credit still very hard to get hold of at the moment

When a friend asks you for a loan, whether it be for a bar tab, to start a business, for their rent you need to think a bit like a bank. In many ways, you're much better off than the bank as you probably know your friend's habits and situation pretty well. Are they trustworthy?

There are genuine benefits to lending money but if you are lending over a longer time period, you should also realise you might never get that money back. If you know someone is going to get paid and they want a 'weekend loan' then it's much more likely you'll get your money back.

Lending to a friend is dependent on what that loan is for. Are they hiding a gambling problem? Are they starting a risky business venture? Are they turning into an alcoholic!? How well do you really know this person?

It's not always very easy to tell if someone is prone to leaving their debts unpaid. Money is the most touchy of subjects for most people and is extremely likely to end up in an argument. 

If someone has failed to pay a debt in the past, or has a habit of borrowing small amounts of money and then "forgetting" to pay up, I'd steer away from them. Similarly, someone who's always between jobs and lacks steady income is probably worth avoiding like the plague.

The amount of money on the table also needs careful consideration. Generosity in small amounts doesn't necessarily transition into major commitments, but some people have a habit of steadily escalating their financial requests if they think they can get away with it.

It's tempting to say that any time a friend asks for a loan, you should tell them to shove it, but that's not always the case. Many young entrepreneurs get their start with a little bit of social "seed capital" from friends and family. If you think someone has a really brilliant idea, your backing could help them get off the ground. But, always get opinions from people who have been in business before and don't expect your money back!

And remember, if you're the sort who's always borrowing from friends and family - think about your habits. Make sure you're not putting an undue burden on them.

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