Right, which means the loan is actually a USD (or Euro or whatever) loan however you want to spin it.  The value of BTC never enters into it; is just payable in BTC.  This is not a hedge.  A hedge is a position that protects against the risk in another position.  A true hedge would be to lend 10 BTC and then go sell short 10 BTC at $X, or more likely to buy an option to sell 10 BTC at $X.  Posting a link to the Wikipedia article on hedge doesn't make what you are offering a hedge. (Incidentally, from the very first line of said article: "A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment."  There is no companion investment in what you are doing.)

But whether you are offering is properly called a hedge or not is not really important.  However, you failed to answer actual question in my post, so I went to the site and did it myself: it appears that the buyer decides payback calculation when they create a loan.