There are both debit and credit loans depending on who is loaning who. The two parties are the person recording the transaction and an external third party.\\

A debit to a loan account only reduces it if it is a credit loan. A debit to a debit loan account actually increases it (Think a bank giving further money to their customers).

If you are debiting a loan account it means the external third party is giving cash to the person recording the transaction.

If you issue a refund then you are giving cash to the external third party so its a negative (credit). Then the positive side of the journal is against your income account (reducing your income).

Debits and Credits are not positive and negative, but they are a concept that was invented before negative numbers existed and are perfectly represented by positive and negative numbers.