The boss is keen on both Loftus-Cheek and his team-mate Ross Barkley though it is the former who appears more likely to leave Stamford Bridge before next Monday’s transfer deadline.
Premier League rules mean Villa can only sign one player on loan from another top flight club.
Smith said: “Midfield is an area we’re looking at where we feel we lack numbers.
“There are many players who are speculated upon all the time and we are looking to add more to the squad.
“We don’t want too many more because we don’t want to be stockpiling players but we want to add some quality where we can.
“We’ve got John McGinn, Douglas Luiz, Marvelous Nakamba, Conor Hourihane and Jack (Grealish) who can also play there but we feel he’s a bit more productive playing off the left, so we’re a little bit light in there. It’s certainly an area we’re looking at.”
Smith would also like to add another attacker to his ranks, though not necessarily a centre-forward, despite last week’s departure of Mbwana Samatta to Fenerbahce.
Villa have record signing Ollie Watkins and Keinan Davis on their books, while Bertrand Traore can also play through the middle.
“He’s a player whose positions have been wide right or centre forward so if needs be, we’ve certainly got one who can play there as well,” said Smith.
Samatta headed to Turkey just nine months after signing for Villa from Genk and the boss continued: “I think it was the right decision in the end.
“He couldn’t be guaranteed minutes here and we’ve paid out a record amount of money for Ollie, who we believe is going to be a top striker here.
“Keinan has signed a new contract as well and we have Wesley to come back in the new year.
“We just can’t stockpile players and we had an offer from Fenerbahce and I think Ally (Samatta) reluctantly agreed to go.
“We’re disappointed it didn’t work out how we all wanted because he’s a good player and a really good lad.
“But the club has moved on from that and we wish him well in his career now.”
Reports in Denmark linking Villa with a move for FC Copenhagen centre-back Victor Nelsson are thought to be wide of the mark.