Would opt for the above options of payment any day of the week.
As for cash, no issues whatsoever in withdrawing any amount required. If it's in your account, you can withdraw it. If some government agency wants to track you, they will, but if there is a legitimate end to a transaction it's all good, you won't even know you're being looked at.
Personally, I would have whoever is lending him the money transfer it straight into your account. Less steps/transfers means less chance something could go wrong.