I understand you don’t need to lend money to a mechalel shabbos. My question is do you have to lend money to a tinuk shenishbar – that’s a mechalel shabbos??
It is questionable if a person that is mechalal shabbos nowadays is considered a tinok shenishba or not. It depends on the individual person, how much exposure he had to torah, if he would be exposed to torah would he be willing to be mekayem mitzvos, etc. Therefore it is a safek, and the mitzvah would apply. When lending him money, you must be sure that you have proper guarantors, collateral etc. that the money will indeed be returned and that you won’t have a loss from giving the loan.
Toras Chesed on Sefer Ahavas Chesed 3-3.