It is generally accepted that banks can create money by lending. If sb. wants to take a loan the bank simply extend the balance sheet by creating that loan. The bank has to adhere to reserve and capital requirements which limit the amount of money a bank can create by this process, although it is a multiple of the amount of money the bank has as reserve requirements.
In economics the ability to repay the bank with future revenue by the debitor is regarded as an asset, thus it is argued the bank does not create money but is engaging in liquidity transformation, transforming an illiquid asset (ability to repay) into a liquid asset. (loan)
Also If sb. want to take a loan to finance a business the banks will require a business plan. But ultimately what disincentives the bank not to approve as many loans as possible? (and thus charging interest which is a major source of income for banks) Since a bank does not mediate money it acquired through depositors what is the problem a bank faces if a debitor defaults on a loan, assumed that the debitor does not withdraw the money as hard cash, which would diminish the banks reserves?