Many readers will have been taught that “loan” is a noun and only a noun. The verb form then is, “to lend” not, “to loan.”
That’s the way I still use these two words. That is, “I lend money,”“ I do not loan it.” Money lent this way is called a loan.
Usage experts don’t entirely agree. They advise that loan as a verb is acceptable but not preferable.
American Heritage Dictionary has a usage panel composed of 106 linguists and English experts. Here’s what this dictionary has to say about loan/lend: “Loan has long been established as a verb, especially in business usage. Lend is considered by many to be preferable to loan in general usage, however, and particularly in formal writing. More than 70 per cent of the Usage Panel express a preference for lend.”
The OED says loan as a verb is now chiefly heard in U.S. English, although such usage actually goes back to 1470. Johnson’s 1756 Dictionary of the English Language defines to loan as a verb meaning to lend.
The 1927 New Twentieth Century Dictionary says, “Loan is used as a verb only this way: ‘to make a loan;’ ‘available for loaning;’ ‘We could not expect to have money loaned to us.’”
Historically, it appears that loan as a verb died out for centuries, then underwent a resurrection in the 19th century. Fowler’s 1926 edition of Modern English Usage tells us: “The verb, formerly current, was expelled from idiomatic English by lend. But it survived in the U.S. and has now returned to provide us with a needless variant.”
The updated Fowler (2004) states: “In 19th century British English, loan was a standard alternative to lend, but by the 1920s had been largely driven out by lend although it has continued in use in American English. In current use loan is mostly confined to non-British varieties of English ... In normal contexts, loan is a so-called ‘needless variant’ of lend.”
So what is a needless variant anyway?
It’s a word that emerges for no explainable reason since the necessary word or term already exists. Variants often have a legitimate alternate spelling — judgment, the variant of judgement.
The Oxford Companion notes that frequently, “a similar but distinct ... spelling separates British English from American English, e.g., despatch (British) and dispatch (American), colour (British) and color (American).
Nelson Canadian’s usage note tells us: “The verb loan is well-established in North American usage and cannot be considered incorrect. But loan is used only to describe physical transactions, as of money or goods. For figurative transactions, lend is the only possible form: Distance lends enchantment.”
Lend is also required in fixed expressions — lend-lease, moneylender, lending library.
Success with Words points out: “The use of loan as a verb is well-established and cannot be classed as an error. But lend is still preferable.”
Both words emerged from the Old Norse, lán (a gift). The Old English verb form, laenan, became lend while the noun form, laen, became loan.
My advice, for what it’s worth? Don’t use loan as a verb.