I have already loaned the guy some amount in my local currency but under the agreement that he pays back with interest, and at stipulated time frames, that way if he defaults from the timing, the interest will help to protect my capital loan amount that is in his hand.
I was going to suggest this to you, but you beat me to it, and you did well. Your friend only asked for money, so you're not obligated to pay him in Bitcoin; You can use your local currency, dollars, or any stablecoins in your holdings. It is good that you made an agreement with him to ensure your rights. Indeed, you are a good friend, and you understand the meaning of friendship. And what you did, of course, was a great help to him, and if I had been in your shoes, I would have done the same for him.
After all, who among us doesn't face difficulties and challenges in life? So always keep your job from which you get your local currencies or any fixed source of income, or invest in Bitcoin the amount that does not make you one day break your holdings for which you have waited so long. You have given up a lot of things in exchange for collecting what you have in amount. I advise you if you do not like giving anyone a loan and your circumstances do not allow that, then do not tell anyone about your investments.