I will often use the loan system, to players who are mostly developed, but who need first team football in order to properly develop. However, when I do this, I do make sure that the club has top, top training facilities, and that there is nobody better in their team in his position. I do this with players in every position, goalkeeper, defender, midfielder and striker. I will often have them loaned to two or three clubs, in different scenarios, to test how well they do in different environments.
Take this guy as an example.
View attachment 357859
View attachment 357860
I loaned him out to three clubs before he became a regular at my club. He played at Derby, where he got first team experience in a relatively low quality league, for a non dominant team, and then he got played at Celtic, where he played in a poor league for a dominant team, and then he played in the premier league with Arsenal, a very dominant team in a very good league. Afterwards, he came back and has been a very reliable player ever since (kept out of the first team only by the world class striker I have). Don't let the league stats fool you, for me he has played 210 times and scored 130 goals, and has scored 117 goals in 102 international appearances. If he didn't go on loan for those three seasons, he would not have ended up as good.
A lot of people on here slag off the loan system, saying that a player doesn't develop. I've almost never had that. When a player of mine has gone out on loan for first team football and at a place with very good facilities, I have always had them come back a much better player. Here's another example.
View attachment 357854
View attachment 357855
Got good experience in the first team at Bolton, then got a full two seasons at Olympiakos (affiliated club, that's why they didn't pay), where he was there best player, running rampant in the league. He returned, but found first team places hard to come by with Marquinhos, Balanta and a couple of regens ahead of him in the pecking order, so he's gone off again, to Intern, where again he is getting played week in, week out, gaining very valuable experience and performing at a very high level. When he comes back, he'll be in and around the first team, but if he had stayed in the reserves instead he would have gotten nowhere. Playing time is vital. I don't let my players go on loan without it.
TLDR: Loaning works very well so long as it is done right.