Why not?
Lets say I have 1 bitcoin there , If I pay on time , great. If I dont pay up , take it from my account. Block the amount until its paid back. Very simple to give someone 0.25 if they are giving you 1 bitcoin as coll.
Sure, I'm happy to do that. It would be an unwise idea to take a loan like this from a financial point of view, but if you want to I won't stop you.