Borrow money from your close friends

Yep. And pay them back.

It's an option that has been in the game since release, but only occurs when you reach, I want to say level 7 of the Charisma skill. I believe at level 9 you can borrow larger amounts.

Has anyone tried not paying a sim friend back? What would happen if you don't pay the friend back?

Nothing happens.

Nothing happens at all if you don't pay it back, but you can only do each level of loan once per townie, and large loan will sometimes fail. Paying back the loan give a bit of charisma skill, but one you max charisma there is no particular reason to ever pay back the loans. :)

Yes, I know that.

I borrow money from people in town all the time and I never pay them back. I don't care. My Sim is selfish and wants to be rich!