Nearly 20:16, which carries an extra textual variant this verse does not.
Quick answer
The same practical instruction as 20:16: if a man has guaranteed a stranger's debt, get collateral before you extend him anything.
Read both lines
This is the surety warning aimed at a third party rather than at the guarantor. Everywhere else the book tells the reader not to become surety; here it tells him how to deal with someone who already has, and the answer is unsentimental. That man has demonstrated his judgment, so do not lend on his word.
A man's outer garment was also his blanket, which is why taking it in pledge was serious and why the Law required returning it before sundown (Exodus 22:26–27). The saying is not cruel, then, so much as pointed: hold something, because his promise is not the security you thought it was.
Related: Proverbs 20:16 · Proverbs 6:1–5 · Proverbs 11:15 · Proverbs 17:18
New King James Version®, Copyright © 1982, Thomas Nelson. All rights reserved. Full copyright information. Scripture provided by API.Bible.
Go Deeper
If this verse has been used to put weight on you that it was never carrying, ask about it directly.