I think it would very much depend on family culture (and TBH, if you're asking, you're probably worried so probably, there is not a culture of lending in a way that works).
In my immediate natal family, I have lent money (more than 1k and less than 10k); my brother lent me similar amounts when I was getting divorced. These sums have all been lent on an 'honesty' basis and have all been paid back. My parents lent my older brother a larger sum when he was buying a house. I don't believe they had any formal agreement about it, and I know he paid it back. They also lent me more money than that to buy a house, under a formal agreement. I have no intention not to pay them back (!), but if I failed, they would legally be entitled to take that money back by requiring me to sell the house (and, if I were in negative equity, anything else valuable until I could pay them back). They would not have chosen to do this (nor would I), and the reason we're doing it is that my partner has such bad credit we couldn't get a mortgage. I do know it's quite clear to everyone in my family that you'd never loan money and not pay it back; it's never been treated as emotional, even if someone is struggling. Either you give money because you can afford it (and it's a sensible amount), or you loan it and the other person knows they must pay it back and it's non-negotiable. Having a legal agreement for large sums makes it less emotional, and it's a good option if you are organised about it.
By contrast, I would not lend money within my partner's family, because the attitude to money is much more informal. I would never take a family loan if I didn't know how it would be paid back. My MIL would always take a loan because she simply doesn't think about things like that. She would always mean to pay it back, and she would do small, generous things like buying you a nice book or a pretty present, but it would not occur to her that she really had to have plans to pay back the whole sum. In her mind, if someone lends you money, they don't really need it, so they won't mind if they never see it again. My BIL and SILs are a bit similar.
I could be wrong, but I think probably attitudes to lending have a lot to do with how well-off you are as a family, and probably, being willing and able to lend money to family is what keeps some families rich. My MIL won't pay back a loan because she has been poor and struggling all her life, and it's normal to her to take whatever she can and avoid paying it back, because otherwise she would not cope. By contrast, my dad is delighted he loaned my younger brother a deposit on a London flat in 2009, because my brother of course paid back that sum and has recently sold that London flat for enormously more than it cost a decade ago. It's ethically really tricky.