Conventional wisdom says friendship and finances don't mix and recent surveys back this up.

In the Bank of America's "Friends Again Report," more than half of respondents have seen a friendship end over money and 77 percent of Americans believe IOUs are harmful to friendships.

"According to our study, money is cited as a key stressor in friendships, and friends would rather talk about nearly anything -- such as drama in their family or even their weight — before talking about money," says Meredith Verdone, chief marketing officer at Bank of America told The Street. Trying to ask for the loan to be paid ranked second only to forgetting someone's name as their most uncomfortable situation.

The situation can go from bad to worse. Of those who decided to co-sign on a friend's loan, more than a third ended up having to pay some or all of the loan because the primary borrower did not, reports CreditCards.com.

So what do you do when a friend comes right out and asks you for money? Is it ever a good idea to give in? What if you really want to help? Here's how to handle this sticky situation.

Just Say No

You can say no. In fact, it's probably the best thing to say, for both you and your friend. But how do you do it in a way that is kind and relatively painless for everyone?

• "I wish I could, but I can't afford it right now."
• "I've lost friendships over money before, and our friendship is too important to me. Now I make a policy of not lending money."

Offer Other Forms of Help

Is there another way you can offer your friend assistance? Can you help connect her to resources or other possibilities for the loan? By offering to help brainstorm other solutions, you demonstrate your care the the true value of the friendship.

"A true friend or relative will be willing to accept no and then thank you for any additional help," Nancy Rones wrote on LearnVest. "If she doesn't, better that your relationship sours before you've forked over any funds."

If You Must Say Yes

You're willing to throw caution — and potentially your relationship — to the wind. Here's how to set yourself up for the best possible outcome.

Only lend what you can spare

You don't want to put yourself in a financial pickle in order to help your friend out of hers.

Get the loan in writing

To protect your friendship, treat this as much like a business transaction as possible. You can get a free promissory note form online. Spell out the terms of the loan, including repayment and interest. You might even consider getting it notarized.

Don't expect your money back

This bears repeating. Consider that money gone — a gift, if you like. That way, if the money isn't repaid, the transaction won't be haunted by the same emotional awkwardness of unmet expectations. (That is, at least from your end; your friend could start avoiding you due to their sense of guilt.)

"If you loan a friend or family member any money, it's best to do so without expectation of being repaid," Ryan Stewman, CEO of Hardcore Closer, LLC, told The Street. "When you loan someone close to you money, getting repaid is a bonus."