One reason is purely out of goodwill, to help someone out. Another way is to invest your money (which is basically what a lot of people end up doing today), this can be viewed as a form of lending, but with the possibility of making profit. So if someone wants to take a loan to start a business for example, you lend them money to own a portion of it, and hopefully get something in return. Basically what VCs do nowadays.
Should probably add: why would anyone lend money without interest to someone they don’t know?
Right, lending money without interest is pretty common within families and trusted friendships. But obviously the amount of credit available loan free from friends or family is going to be significantly less than what a financial institution would give you.
Because there’s a very substantial system of laws and governance enforcing the terms of the loan.
But if there’s no money to be made, why would a business bother?
Well, if you can basically create money out of thin air, then the interest rate for loaning it out ought to be pretty low.
Especially when you will be bailed out by the government.