Some people refrain from this mitzvah of giving loans because in the past they had a bad experience when they loaned someone money and the borrower did not pay back the loan. But in truth this is not a reason to not give a loan now. For even if one person stumbled and did not pay his debt that does not mean that all Jews are suspected of not paying their debts. Therefore, if the fellow asking for the loan is someone that the person trusts and is not suspect, he is obligated to give the loan.

And if it is the very fellow who in the past did not repay the previous loan, then it depends: If the reason he did not repay the previous loan was because he is ruff person who simply refused to return the loan, then it could very well be that the lender is not obligated to give a new loan to this fellow, even against collateral, for fear that the fellow will attack him with false accusations. But if the reason the fellow did not repay the earlier loan was because he became impoverished and now he is asking for a loan against collateral, then one is obligated to give the loan to the fellow.