I've investigated 2 different banks regarding this, Canada Trust and CIBC.
Canada Trust used to allow loans from your self-directed RRSP to yourself or a third party for the purposes of a second mortgage on a home, they no longer do that.
CIBC will allow the loaning of money to yourself or a third party from your self-directed RRSP as a second mortgage on a property with a few rules:
1) The interest rate you charge must closely resemble CIBC's own rates
2) CIBC must hold the first mortgage
3) The loan has to be for a mortgage on a real estate property. No other collateral or unsecured loans are permitted.
I had to phone-chase for an hour or so before I finally found someone who knew what I was talking about, and was willing to answer my questions, but offered little extra information. I got the sense I was being discouraged from asking.
Another way to accomplish this is to forget the RRSP and make the loan.
When lending as a person to a person, you must declare the profit you make on the deal as income on your personal taxes. If you want to make a career of making personal loans, you can set yourself up as a corporation or sole-proprietorship and claim expenses against the income. Expenses can include delinquent clients, a portion of your home's expenses if you set up an office, a computer, part of your phone bill, perhaps part of your car expenses if you travel to your family to pick up and drop off cheques, or visit the bank.
Depending on the size of the loan you may incur more expenses than the income you generate, showing the CRA that you have actually lost money in making this loan. Keep in mind, however, the CRA doesn't want you to open a business to lose money; they want you to have a "Reasonable expectation of profit" when you open your business. They typically give you 5 years to turn a profit, and may start auditing your business after that if you're still running a loss.