Never bring money into friendship. Or better, never bring promise of money (even if it is as a guarantor) into a friendship. Will save both of you a lot of burning later.

Stay away, that would be my suggestion. Your friend may initially feel you let him down. But if the friendship is strong enough, he'll quickly see you did the right thing. Or else, just think that he wasn't meant to be a friend.

I'd have done that If i were in your place. Just my two penny for your thoughts.