When Kelly McCain learned that her best friend of 22 years owed money to a former girlfriend, she didn't hesitate to transfer $10,000 to her friend from a high-yield savings account that was reserved for emergencies.
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Without a written contract that outlines the loan amount, the potential interest rate, the terms of repayment and what happens if it is not repaid, the money could legally be considered a gift, said Jackie Combs, a lawyer in Los Angeles.
“Whether or not your friends are in a high-trust relationship, including a partnership, it is still important to have legal agreements in place that protect your interests,” she said.
It is also important for people who are married to tell a spouse about lending to friends, Ms. Combs said, especially if the money comes from a shared account or could affect household finances.
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“When Your Lender ls Also Your Best Friend,” by Kami Rieck, was published in The New York Times on May 23, 2026.