are you recording the audio before or after you make the loops? if you are recording after you physically made the loop, you are hearing the gap between the erase and record/play head(s). the erase head comes in contact with the tape first, then the tape travels a bit before it reaches the record/play head - so the gap you might be hearing is the part of the tape that has been erased, but not recorded on yet.
if you want to achieve a loop without a gap, you need to record the audio first and then splice the loop - or - modify your unit to defeat the erase head. in order to do this you'll need to physically remove the head (if it is a permanent magnet) or wire in a switch to cut the signal going to the erase head (if it is an electromagnet). you can tell the difference by looking of the erase head and see if there are any wires running to it - if there are wires you have an electromagnet. but then you'll have a new problem of hearing the clunk of the stop button, or electrical pop
another possibility is the tape is effecting how the tape is traveling over the record/play head - i have noticed sometimes if the tape tension is too low, the spliced area will develop a permanent bend causing the tape to pull away from the head in areas (causing drop outs) so making sure the tape is tight once the tape is in play/record mode would be the remedy for that problem.
also, i have noticed with thicker tape, you usually get a bump each time the tape travels over the head (due to the relative thickness of the splice) but usually not a gap in audio as well...
otherwise if all of the above doesn't solve it, i think marc's advice is great making sure the tape is spliced on the correct side (scotch or splicing tape opposite the record/play head)
in the end, it is the imperfections that are most often the beauty - why else would we be interested in making loops out of magnetic tape when there are plenty of ways to make much cleaner loops digitally