No offense, if you trust the person, why you didn't lend your money? I feel like if you didn't want to lend your money, it means you're not completely trust the person. Yeah you could argue if you don't have enough money due to your needs or the amount is too big, but the point is you can lend the money you currently have, not necessary to lend when you have full amounts.
Absolutely, if you say someone's good for a loan and they end up not paying it back, that makes YOU look bad. Your name and reputation are on the line. It's like you promised everyone "Trust me on this dude" and then dude flakes out and leaves you high and dry. Not a good look.
Are you sure? I'm not, @OP is one of among users that has a privilege.