What does the Bible say about loans and interest?

Q. What does the Bible teach about loaning MONEY and charging INTEREST? Does it matter if a loan is for personal or business use?  Is it WRONG to charge family, friends or fellow church members loan interest?

A. One quote that comes to mind is:

"Before you lend money to a friend decide which you need most, because you are sure to end up with one or the other."

I do not know who said the above but it's certainly true. Many good friendships have been destroyed by a few dollars loaned but not repaid.

Thousands of years ago God made provision for lending money. He told ancient Israel,

"At the end of every seven years you shall grant a release of debts.  And this is the form of the release:  Every creditor who has lent anything to his neighbor shall release it;  he shall not require it of his neighbor or his brother, because it is called the LORD'S release.  Of a foreigner you may require it;  but you shall give up your claim to what is owed by your brother . . . " (Deuteronomy 15:1-3, NKJV)

In other words, at the end of every seventh year (beginning when the tribes of Israel entered the land promised by God) every Israelite who lent money to another Israelite was to consider the debt paid in full. On the other hand, if the money was loaned to someone outside the tribes of Israel there was no command for the creditor to release the debt (verse 3).

But there's more. If a fellow Israelite wanted to borrow money DURING the seventh year, the creditor was not to say, "Hey, it's the year of release. I could lose everything, so come back next year" (verses 9-10 paraphrased).

Now comes the hitch. God commands that we are not to charge our brethren a single penny in interest on a loan (Exodus 22:25; Deuteronomy 23:19).  Again, however, if the loan is to someone outside the brotherhood, interest may be charged:

"Do not charge your brother interest, whether on money or food or anything else that may earn interest.  You may charge a foreigner interest, but not a brother Israelite, so that the LORD your God may bless you in everything you put your hand to in the land you are entering to possess." (Deuteronomy 23:19-20, NIV).

"But that's all Old Testament," you say. Well, let's see what's in the new.

Jesus tells us to give to him that asks, and do not turn him away:

"Give to him who asks you, and from him who wants to borrow from you do not turn away." (Matthew 5:42, NKJV)

In the book of Luke Jesus makes it clear that we're not even to turn our enemies away in their need:

"Give to everyone who asks you, and if anyone takes what belongs to you, do not demand it back. . . .

"But love your enemies, do good to them, and lend to them without expecting to get anything back.  Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked." (Luke 6:30, 35, NIV)

Other scriptures to study concerning your questions are Matthew 25:35-40; 2Corinthians 9:6-7 and James 1:27; 2:15-16.