McDonald, 21, has figured just once for the Clarets so far this season, coming off the bench to score in the Carling Cup win at Morecambe in August.
Burnley boss Brian Laws is happy for McDonald to join the club he used to manage, saying: "It does them a favour but it does us a favour. Kevin needs to get some games.
"They play a style of football that will suit Kevin down to the ground so it's a great move for him as well.
"He's playing in the Championship so we can keep a close eye on him and I can keep a close eye on him because I live around the corner! He's not disappearing too far."