Qitzur Shulchan Arukh – 179:2-3
Even someone wealthy, if he needs to borrow money, it is a mitzvah to lend to him and give him benefit even with words [such as] giving him advice that is appropriate for him.
It is prohibited to lend money without a witness — even if to a talmid chakham. Except if he lends with collateral. Even more praiseworthy — lending with a contract.
Relying on someone’s trustworthiness is testing their mettle to an extent that it is prohibited. Temptation strikes us all, even the sages among us.
Although, as we saw in the events that led to my launching this series, different people are tempted by different things. Someone might justify their denying a loan for personal gain. Someone else might engage in financial chicanery only if necessary to keep their institution open and rabbeim paid.