401k plan: taking a hardship withdrawal after taking a loan

If a participant takes a loan out of their 401k plan account and they take the maximum amount available - 50% of their vested account balance (they are 100% vested).  A few months later, they have a hardship and would like to take a hardship withdrawal that would remove most of their balance in the plan.  Is this permitted?  If so, it would drop their investment balance and the outstanding loan balance would now be well over 50% of their total account balance.

Thank you for any comments.

The loan only has to be capped at 50% of the vested balance at the time of origination.  The "loan first, hardship second" approach is acceptable and common, actually.

Similarly, if remaining account balance investments incurred a 20% loss, you wouldn't be forced to call the loan because it then exceeded 50%. As Bri said, it's an origination snapshot.

Yes it is.  And the loan first, hardship second is no longer in play.