It is difficult to decline someone to ask for a loan especially if they are close to us as we could think that he/she will feel mad. But yes, sometimes we need to make a decision even that will hurt someone's feelings. We have not just looked at how they feel but also, consider our situation if we are in the position as can't just let it happen if we know that also compromises our investment plan. Explaining may help him/her understand our stance so at least will help them clearly understand why. But still expect them to think it is bad. Well, real friends will certainly understand and that is what we look forward to.