Whether the loan contract is good or not depends on the state that you live in, but most basic promissory notes should work. As for collateral, if he doesn't have anything, then you don't have any. What is he doing with the money? If he's buying something with it, then take an interest in that. It sounds like he doesn't have real property, so you would most likely be taking an interest in personal property. The UCC governs that, and it has been adopted in whatever state you live in in one form or another. Check Article 9. Those forms are pretty standard from state to state, though.

Sorry - I know I'm a noob here, but this is sort of what I do.