Dishonesty is not how to repay someone who has lent you money. And it will make you feel guilty. Ruin the friendship. Stress you out more. Not a good idea. Tell him the truth and ask what you can to do pay him back. It needn't be money. It could be (off the top of my head, I realise he lives far from you) teaching him the guitar, computer lessons, painting his kitchen, help with a project..... In business, big or small, you live and die by your reputation. Make it a good one. And get some financial advice from organisations that help with start ups. Good luck!