Lending money to a person who has no way to pay back:[1]

If the lender knows that the borrower does not have the means to pay back the loan, and does not plan to invest the money in a business which will bring profit, but rather wants to use it in a way that will not produce any income and will leave the lender without the means of collecting his debt, then not only is he not obligated to lend him the money, but it is even better not to do so.[2] [If however one knows that the borrower has income coming in that can cover the loan, or that he owns items that can be sold to cover the loan, then he is allowed to lend him the money.[3] Nevertheless, he is not obligated to lend him money simply on the basis that he can sell his items if there is worry that he may not do so.[4]]

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[1] Admur Halva 5; Michaber C.M. 97/4; Tur C.M. 97/8

[2] The reason: As in the end he will need to pressure him to pay back the money and will transgress each time the prohibition of “Lo Sihyeh Lo Kenoshe.” [Admur ibid]

[3] See Ahavas Chesed Dinei Halvah 1/9 that if a Mashkon is given he may lend him the money if he wants, and the same would apply to if he has items he can sell, as Admur Halvah 13 rules that so long as one has more than Sidrei Baal Chov one does not transgress “Lo Siyeh Lo Kinoshe”

[4] See Avnei Yashpa 2/119

[5] See Admur ibid that one is not obligated to lend to a person who is known not to have the means to pay back, and certainly this would apply to one who does not want to pay back; See Ahavas Chesed Dinei Halvah 1/10 that one does not have to lend money if he may incur a loss as the May one sit next to the opposite gender on a bus result; See Avnei Yashpa 2/119 that one does not need to lend to a person who one does not know

[6] Avnei Yashpa 2/119