Currently Google text documents do not allow for a background image or watermark. Here is a work around hack.
Create a Google Slides Presentation
Insert a Blank Slide
Resize the Canvas
This sets the background image on your “document.”
Mute the Background
If the background image is too bold and distracts from the text on the document, you can cover the entire slide with a white rectangle with no border. Reduce the opacity of the white rectangle to a level that allows for the background to be seen but the text to still be prominent. Click Here for my blog post on reducing opacity.
Insert Text Boxes
Create a large text box that covers the entire slide. Type your text.
Create a textbox that says “DRAFT” or whatever you would like your watermark to say. You can edit the text size manually, you are not restricted to the size choices in the drop down menu. Simply double click on the font size in the toolbar and enter the desired size. I choose something around 250.
Right click on the edge of the textbox to arrange the order of the watermark. Choose “Order” and “Send to back.” If you chose to have a white rectangle with reduced opacity to mute the background you may instead want to choose “Send backward” and repeat that if necessary to get the watermark in the correct “layer.”
If you did it correctly the watermark will be above the background but below the text box.