Giving zakaah to a poor person on the basis that it is a loan, for fear that he may waste the money on things that are not necessary
Question

If one of us has a relative who is bankrupt, and we want to give him zakaah, but based on experience we know that he will waste the money, especially if it is a gift, then is it permissible to give him the money as a loan, with some conditions so that it may improve his situation, such as stipulating that he use the money to set up a grocery store, so that he will not waste it, but the intention is that it is zakaah, and when he pays back the loan it will be given to him again to spend it on other things that he needs, such as getting married, for example?
Praise be to Allah.Firstly:
If this person is entitled to zakaah, he may be given zakaah, and it is not permissible to give him the impression that it is a loan, for two reasons:

Because this is lying
Because debt is a cause of stress and worry, and it is not permissible to put a Muslim through that.

Secondly:
If there is the fear that he will waste the money on things that are not necessary, it is permissible to use zakaah funds to buy him what he needs of items or food and drink, and the like. However, it is better to say to him: You have a sum of money donated by good people; what do you need, so that we can buy it for you? Thus he will be delegating you to buy things on his behalf.
Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) was asked: Is it permissible to give zakaah in the form of consumer goods and clothing, if it is known that in the case of some poor families, it is better to buy these things for them, as there is the fear that if they are given cash, they will spend it on things in which there is no benefit?
He replied:
This issue is important and people need to understand it: if the people of this household are poor, and if we give them cash they will waste it on unnecessary things and things that are not useful, but if we buy basic necessities for them and give them to them, is this permissible? The well-known scholarly view is that this is not permissible; in other words, it is not permissible for a person to buy things with his zakaah money and give them instead of giving cash. They said: This is because cash is more beneficial to the poor person, because he may dispose of it as he wishes, in contrast to giving specific items, because he may have no need for them, in which case he will sell them for less than they are worth.
But there is another way. If you are afraid that if you give zakaah to the people of this household, they will spend it on things that they do not need and are not essential, in this case, you may say to the head of the household – whether it is the father, the mother, the brother, or the paternal uncle – I have some zakaah money for you; what things do you need, so that I can buy them and send them to you? If [the one who wants to give zakaah] does it this way, this is permissible, and the zakaah will be given in the proper manner.
End quote from Majmoo‘ Fataawa Ibn ‘Uthaymeen (18/481).
If this does not work with him, then you may buy what he needs, even if he does not ask you to buy those things, based on the view of those scholars who say that it is permissible to give the value of the zakaah, when there is a need to do that or doing it serves a purpose. This was stated in a fatwa issued by Shaykh ‘Abd al-‘Azeez ibn Baaz (may Allah have mercy on him), and it was the view favoured by Shaykh al-Islam Ibn Taymiyah (may Allah have mercy on him), who said, in Majmoo‘ al-Fataawa (25/82): With regard to giving the value, when there is a need to do that or when doing it serves a purpose, or for the purpose of being fair, there is nothing wrong with that, such as if a person sells the fruits of his garden or his crops, in exchange for cash; in this case it is permissible for him to give one tenth of the cash [as zakaah], and he is not to be instructed to buy fruits or wheat [to give as zakaah], because in this case he is treating himself equally with the poor and being fair. Ahmad stated that this is permissible… And such as when those who are entitled to zakaah asking him to give the value in cash, because this is more beneficial for them; in that case he may give zakaah to them in that form. End quote.
See also the answer to question no. 138684.
And Allah knows best.