If you were not allowed to lend money to people like this technically you could not own shares in say BT, its the same idea. Also could you have premium bonds? same principle.
You could argue that a "hobby" is therapeutic and could be helping you recover/relax, any monies made would be used to buy more hobby craft. Just my idea and a way I would reply if I was asked.

atos assessors take an interest ina claimants hobbies as it can show motoivation, concentration, work as a measure of physical ability and so on, and depending on the hobby, ability to interact with others.

A lot will depend on whether the activities show your medical condition may have improved since previously assessed

Hi
That's what I was thinking regards shares. My hobby is definitely therapeutic and anything sold really would be to buy more materials.
With regards to the "physical work" involved, it would be sporadic and only when health and disabilities allow. I would also receive help and encouragement from family. Definitely not a part time cottage industry if anybody thinks that.
I am,of course,compiling answers for future questions if they are asked and hope I can give others on this forum ideas too.
Regards Peter