Really you have to look at the realistic aims and the long term strategy. Loans are expensive and they are short term. They should only really be used where they have to be and that is to add a bit of extra quality to an already good squad to challenge for promotion (or to save a squad from relegation). If you get promoted then you have spare cash and no squad player to replace with better quality players for the next league up. If you don't get promoted then you have half a squad to replace every transfer window. We have 6 loan players which are going to have to be replaced in the summer. It means a full rebuild every season which doesn't seem optimal.
The other thing that loans do is stop your own players from developing. We had Hackney in our squad but we brought in Mowatt. If Mowatt hadn't flopped we wouldn't have seen any of Hackney. If Muniz hadn't flopped we'd have seen little of Forss etc. There seems to be an obligation to play loan players when it would be better to develop our own players. The other benefit of developing your own players is that even if you aren't successful in getting promoted you are taking cheap players and then selling them for a profit. It's a far more sustainable model than developing other teams players so they can sell them on to you for over-inflated values down the line.
Do players even care about the club when they are on loan there? I would guess not in the same way as the permanent players do. How many of them actually work out? This season alone we only had 2/4 that could nail down a starting place (wait to judge at the end of the season on the other 2). That's big money to be bench warming. Last season's were all poor.
We all want to see better quality players playing for us so I'm not dead against loans. I just think a more sustainable model is the developmental route.
