Many subscribe to the notion that it’s bad business to lend money to friends or family. However, how do you handle the refusal of a loan in a way that makes a loved one feel like it is nothing personal? Here are several tips on how to refuse gently, while still helping your friend or family member:
Don’t feel pressured. People agree to these types of loan requests because they don’t feel they can say no and they feel backed into a corner with no way out. You don’t have to say yes, so don’t let the pressure get to you.
Respond quickly. In deference to your loved one’s problem, and to ensure that you don’t build any false hopes, try to respond right away. However, if absolutely necessary, tell your friend or relative that you need more time to think things through and that you’ll let them know within 24 hours. This can make the decision easier, because you will have time to reassure yourself that you are doing the right thing. The extra time will also give you time to form and practice an articulate response.
Be firm and concise. When you speak to your friend or relative, firmly explain that you are not able to provide them with a loan. For example, “I’d love to help, but I’m just not in a position to lend you the money right now.” This is short and to the point and does not provide room for argument. If they have your best interests at heart, this should be the end of the discussion.
Don’t make promises you can’t keep. After you’ve decided you won’t make the loan, don’t beat around the bush. Make it clear you won’t be able to lend any money; don’t try to let them down gently by stating that you may be able to give them money at some point in the future. If you hint that a loan might be possible “someday,” you’re just setting yourself up for the same awkward conversation in the future.
No exceptions. If you really and truly don’t want to loan money to friends and family, you can’t make any exceptions. Loaning money to one relative but refusing to loan money to another relative could cause potential conflict within the family. Stand firm and don’t back down from the decision not to lend money, even just this “one time.”
Provide options. Once you’ve established that you can’t provide the loan, don’t just leave your friend or relative in a hopeless situation. Instead, offer to help by reviewing their finances, suggesting alternative ways to earn income, or exploring alternative lending options.
Don’t feel guilty. You’ll probably feel guilty about not lending money, but you need to get past this feeling to successfully reject the loan request. It’s not your fault your friend or relative is in a financial mess, and there’s no law that says you must give up your hard-earned cash to help someone else. If you can’t afford to help or don’t want to help, you shouldn’t feel guilty. Once you provide a valid reason for refusing to lend money to someone, it’s up to them to accept this and move on.
There’s no reason why refusing to loan money to someone you care about has to get in the way of your relationship. If you’re upfront and honest about why you can’t loan friends and relatives money, and if you offer to help them find alternative ways to eliminate their debt, the relationships should still remain intact.