Loan to former participant who is now Union Employee

Employer sponsors a 401(k) Plan.

A while back a group of employees under the plan were moved to the Union Plan.  The participants contribute to the union plan however, their balance from pre-union remains in the Employer sponsored. Plan

A participant who has an account balance and who is now a union employee requested a loan from the "non" union Plan. Technically this participant is not an active participant. The participant is coded as inactive on the original 401(k) Plan.

Since he is not active (which is a requirement for a loan) is he eligible for a loan?

Read the plan document and the loan policy carefully to understand who is and who is not eligible to take out a new loan. 

It sounds like this individual is an active employee who is on the company's payroll, and the individual has an account balance which makes him a participant in the plan. 

Do the plan and policy say a union employee cannot have a loan?  If yes, you likely would not be asking the question.

Do the plan and policy say to take a loan an individual must be an active employee and must make repayments by payroll deduction? If yes, then this employee meets those criteria.

Do the plan and policy say to take a loan and an individual must be an active participant (defined as they are eligible to make or receive contributions into the plan)?  If yes, then this individual does not meet these criteria and cannot take a loan.

Keep going until the path from the plan document and loan policy to the answer to your question is clear.

How the participant happens to be coded in the plan records does not supersede the official plan documents.

Here is a discussion from a couple months ago: