https://torah.org/learning/business-halacha-5757-vol4no1/
Our Chazal forbade us from lending money to others without witnesses present, or without a contract signed by witnesses. The custom today is to rely on one witness seeing the transaction, or a note either handwritten by the borrower, or signed by him, affirming that he has borrowed money from the lender. It is also sufficient if the borrower gives the lender some collateral to guarantee repayment of the loan, such as a check made out for when the loan is due, or some item equivalent to or greater in value that the loan.Without any of the above, even today we may not lend.
The above prohibition applies even if the lender is a Talmid Chacham (Torah scholar), a relative to the lender, or a wealthy person about whom there is no doubt that he will easily be able to repay the loan. (1)However, if the lender knows the borrower to be a G-d fearing person who would never deliberately lie, and the lender decides that if this borrower should ever deny that he owes the money he will forgive the debt entirely and will not seek recourse in Bais Din, if necessary he may lend the money without witnesses, notes, or guarantees. It is still preferable to follow the words of our Chaza”l even in this case. (2)