Let's assume an interest rate of 0%. If the market rate of a bitcoin doubles between now and the date of repayment, you will only have to return half of what you originally borrowed.
As such, taking this on only makes sense for someone who expects the price to go down, unless I'm missing something.
If someone is lent BTC, and they sell to USD, yes they're at risk to BTC/USD flux. They can lock this with a future of 3200USD at todays price, or some floating CFD.
He is requesting a loan denominated in USD. If he borrows $3,400 USD he intends to repay $3,400 USD plus interest.
Today $3,400 in USD is 382 BTC but if BTC rises before maturity he will be repaying MORE USD but LESS BTC. mcorlett is exactly right.
A USD denominated load (any USD loan) is essentially a short BTC posistion. It also could be used by an investor as a hedge if they feel they are long too much BTC but don't want to sell assets (GBLSE stock for example). If you think BTC will be lower at maturity you get the interest plus can convert back to BTC at a better exchange rate. On the other hand if you believe BTC will rise by more than the interest rate you would be taking a loss. Really depends on what the investor is looking to accomplish.