Currently it doesn't work. It's buggy in the way that the lone must be repaid the next month. NO matter how long you set the lending time to end, in the beginning of the next month you have to pay it back (with interest) or loose one stability. (my theory is that the date when the loan begins and ends is the same)
This is for two human players, I've never experienced the computer player either accept a loan from me or suggesting one for me.
This is the 1.7b version.