> No one is loaning anyone money with the expectation that they're going to lose money on it. The expected value of a loan from the issuer's point of view is al

> No one is loaning anyone money with the expectation that they're going to lose money on it. The expected value of a loan from the issuer's point of view is always positive. Well put. But I also find wisdom in the expression "Banks will always be there for you when they need you. They will never be there for you when you need them." The psychology of loss aversion dominates the behavior of lenders big and small. I've seen people I otherwise consider quite smart expect that they can convince holders of capital in various forms (from credit unions and community banks to the giants) to lend to solid small businesses unable to grow due to cash flow constraints. As you point out, the VC world will place bets on expansion, but only with the prospect of exponential growth and exit. Banks increasingly seem uninterested in business lending at all, when they used to lend with the expectation of a reasonable but not extravagant return. I guess payment processing and retail fees are more lucrative and carry less downside risk - until the retail customers dry up and blow away because all the small businesses that used to use credit are gone. But I'll be retired by then, so who cares, right?