My friend laughed at my 9-year-old daughter for being a guy (dwarf) in public. Is it too narrow-minded to ask her not to borrow money because my family is ill and in urgent need?

It is extremely impolite for a 9-year-old child to laugh at other people's shortcomings in public, which shows that there is something wrong with your education and your family style. Your family's difficulties are your family's business, and others have no obligation to help you solve your family's difficulties. Now there are other ways. Why don't you use them? For a family like you, it will make people doubt your repayment ability.