Hardship withdrawals

We have a participant in one of our 401K plans that is requesting a hardship withdrawal that does meet the safe harbor criteria, but he has an outstanding loan.

Does this preclude him from a hardship distribution, since the current loan has not been repaid?

No - as long as meets safe harbor criteria which it sounds like he does not 

Sorry does meet..misread - then yes, fine even with outstanding loan 

I don't know why having an outstanding loan would disqualify a participant (who otherwise qualifies) from taking a hardship withdrawal. I was under the impression that making sure other sources of funds, including any available distributions and any non-taxable plan loans, were tapped first was actually part of the safe harbor requirements.