“Neither a borrower nor a lender be, for loan oft loses both itself and friend.”William Shakespeare · Hamlet · 1601 · Actul I, scena 3
A loan between friends charges interest on the relationship, whether or not the money returns.
The mechanism is psychological: the lender becomes suspicious and controlling, the borrower evasive and ashamed, and the relationship turns into a strained transaction. When the money never comes back, you lose twice; when it does, it is often late and laced with resentment. The advice is not stinginess but protecting the relationship from the pressure of debt. If you want to help someone, giving a small sum is safer than lending a large one.
Why it matters Relevant whenever someone close asks for money: deciding to give or to refuse clearly saves the relationship better than a loan with vague terms.