What is the position of Sharia regarding the relationship between the lender and the borrower (for individuals, not institutions), and is it true that a dirham of a loan is better than a dirham of charity, taking into consideration the Prophet's (peace be upon him) seeking refuge from debt and sin?

It is permissible to take a loan if one is able to repay it, but one should not be lax in this matter. The Prophet, peace and blessings be upon him, was strict regarding debt, mentioning that a debtor might not enter Paradise until his debt is paid, even if he were martyred in the way of Allah. He used to seek refuge from sin and debt, and he said that a borrower might lie and break promises.

Charity is better than a loan for the lender, and forgiving the debt of one in hardship is better than granting him an extension. Meanwhile, a loan is better for the borrower if he intends to repay it, as it preserves his dignity from the humiliation of begging.