It is an inevitability that bad loans get written off. It's just a question when the loss is recognized. You either recognize it up front and write off the loan

It is an inevitability that bad loans get written off. It's just a question when the loss is recognized. You either recognize it up front and write off the loan, or you don't, in which case you keep on losing money into perpetuity, as the person/company misses payments and you have to keep on rolling their debt over or restructuring it, in the hope that you'll be made whole eventually. Over time, the money lost would become equal to the cost of just writing off the loan at the start. But the losses keep carrying on, as you've rolled over their debt, so you'll have to write the loan off eventually, but at greater expense than if you'd have done it earlier.