Devarim 15:7 cautions us not to withhold help to others because of the approach of the shmittah year. However, the help we would expect to give would be charity and thus would not be repaid. If tzeddakah is actually a gift, why would anyone not give it in the 6th year because of shmittah? There should be no expectation of repayment that would be nullified by shmittah. Rashi in pasuk 8 (vha'avet ta'avitenu) confirms that the initial offer we should make should be a gift and only turn it to a loan if the recipient won't accept a gift. So why would the shmittah year discourage tzeddakah?
I think the point is the opposite, that you would think Shmitta is approaching, so you won't lend with any expectation of repayment, so the Torah is saying then give it as a gift, or make it a loan if the person is too proud to take a gift.
However, I would point out that in general the concept of a loan here is really tzedakah that you have minimal reason to expect back. You are not allowed to demand collection of the loan (source and see the whole article for more), not allowed to charge interest and (we see from this posuk) not allowed to assess credit worthiness (to an extent). That is charity wrapped in a loan. However, for the sake of making it a real loan, the lender has real rights to collect the money, it just isn't supposed to happen.
Regarding your comment, yes a loan can be preferable to giving (source).
According to the Gemara (Makkos 4b IIRC), the only loans which are forgiven are those that are past due. So the person may pay on time (or before Shmittah kicks in)- if he does, I get the whole loan back.