Lending Money on Condition that the Borrower Fulfills a Wish of the Lender

The Torah prohibition of Ri'bitt (receiving or paying interest) applies not only to the payment of interest, but also to acquiescing to the lender's will as a condition on the loan. Thus, for example, as Rabbi Moshe Halevi (Israel, 1961-2001) writes in his work Milveh Hashem (p. 159), one may not lend money to his fellow Jew on condition that he – the borrower – gives money to a third party, even to a gentile. Even though the lender does not receive any interest payment, this arrangement is nevertheless forbidden because the borrower must fulfill the lender's wish in exchange for receiving the loan. This applies even if the lender demands that the borrower pay money to a charitable cause, such as a poor person or a Yeshiva. Since the borrower must acquiesce to the lender's will and fulfill his wishes in exchange for the loan, this constitutes Ri'bitt and transgresses a Torah prohibition.

In fact, a lender may not even demand that the borrower take money or one of his possessions and cast it to the river or otherwise destroy it. Even though nobody derives any benefit from the borrower's fulfilling the lender's wishes, imposing this condition nevertheless constitutes Ri'bitt because the borrower is required to fulfill the lender's wishes in exchange for the loan. (Milveh Hashem p. 160)

The Sages extended this prohibition to cases where the lender gives the loan on condition that the borrower approaches a third party and asks in the lender's name that he give him a certain object or sum of money. Even though the borrower in this case actually receives something, rather than pays, as a condition for the loan, this arrangement is forbidden because it requires the borrower to acquiesce to the lender's wishes in exchange for the loan. As mentioned, however, this arrangement is forbidden only on the level of Rabbinic enactment, and does not transgress the Torah prohibition of Ri'bitt. (Milveh Hashem, p. 161)

Summary: A lender may not give a loan on condition that the borrower fulfills his wishes, such as by paying money to a third party or even giving money to charity or destroying money. Even if the lender hinges the loan on the condition that the borrower ask a third party to give him (the borrower) something, this arrangement is forbidden.