Non refundable loan or repayment free loan

Respected Sirs/Madams,

1. Is it possible to give an interest free and repayment free loan to a friend?  Or will it become liable to deduction under gift tax?

2. If I want to give my friend an interest free loan to carry out his business but if incase his business fails, I don't want any repayment or refund of the principal amount. Is it possible to draft such agreement? Is there any such process to do it legally?

Thank You.