I will reply this from a trust tax accountant point of view rather than a trust lawyer!.
A loan agreement is always recommended. HMRC may ask for this if there is an inquiry into either the beneficiaries tax affairs or the trusts.
Some trusts can only make loans by deed of appointment, so good to check the trust deed on this.
Depending on if its a UK or offshore trust, interest or interest-free loan, the beneficiary with have on going tax obligation to report the BIK (if interest-free) or withhold 20% W/T (if foreign trustees) in their tax return.
Also do bear in mind, that there are some loan agreements that can differ the payment of interest to when loan is repaid.
It's likely Finance bill (2) 2017 will introduce quantifying the annual benefit, regardless if beneficiary is paying interest or not.