ArtMan - I too got to the point where I just don't lend anymore. In fact, if asked, I just say, "Sorry, I never lend." (And if I do, it has to be MY idea, because I want to, and at that point I might not even care if the loan were repaid.)
If on a trip with a group and we share quarters, I will say to the group, "Before we get started, I just wanted to let you all know that I don't lend. So as long as you don't ask to borrow money, clothing, perfume, etc., we'll get along just fine."
It may evoke some snarky responses, but I'm at the age where I don't care. I try to say it with a smile and joke about it, but I don't think I have to be defensive, and quite frankly, I bet others in the group wish they had said the same thing. Of course there will always be the sanctimonious, pious, holier-than-thou hypocrites. Meh, I don't need them in my life anyhow, LOL.
Jane - I'm not sure what I would do in your situation. I had what I thought was a life-long friend. We've known each other for decades and traveled together and socialized for a long time. We even joked about turning into The Golden Girls and living together when we got older. Then I went through a very bad spell financially, and was in a bad place emotionally because of it. I reached out to her to talk through my issues, and whoa, she didn't want to hear about it. Turns out she was just a fair-weather friend. All I wanted was a shoulder to cry on. (In no way was I seeking financial help, I just needed to talk, I needed a sounding board.)
Boy, was I shocked and saddened. I am in a much better place now and am back on my feet, and I do miss our friendship. But if I were to see her now, I might say hello and exchange some superficial pleasantries, and then I would keep walking. I'm not saying at all that your friendship would end up like mine, or that the situation is remotely comparable. I'm just saying that sometimes the least unexpected thing can turn a life-long friendship. If you, I'm not sure what I would do. If her, I'm not sure what I would feel about the reminder.
As I have gotten older, there are two things that speak volumes to me, personally. One is the person who is perpetually late. They disrespect my time and they think they are the center of their universe. I no longer can tolerate that. What used to be "charming" in a friend turned into a narcissistic habit. The second thing is the person who doesn't promptly repay a loan or a favor, or even acknowledges the debt.