Legal Question in Credit and Debt Law in Minnesota

Yes you can charge interest. Even without a writing ( which I strongly recommend) you get 6% under MN law.

If you do a Promissory Note or IOU, you can charge 8% if it is stated.

You should also do a date due, with an amortization schedule, and preferably an attorneys' fee clause in case you need to collect.

The writing protects you both from misunderstanding, and if you friend dies, you need a writing to enforce the debt against his estate.

You should be able to charge interest -- 8% is allowed by statute. You might want to get an attorney's help in writing the agreement (promissory note). If this is not an amount you want to lose, you should consider getting a security interest (lien) on something.

lending money to friends can be hard on a friendship -- You might also consider referring him to a site like Prosper.com so he could get a loan from third parties. or even co-signing a loan for him at a bank. There are hazards in co-signing, however.