"So now the VC lends the money from the bank"
"lends" -> "borrows", right?
No dude. Read it again.
The VC lends (the money from the bank) which the vc borrowed, to the clinic.
They are a sort of middle man. It the clinic is on the hook to the bank and the Vc takes fist cut before playing the bank.
Eg. The vc only risked the company they were buying, and gets paid first.
If the VC borrows money from the bank and lends it to the clinic, the clinic is not on the hook to the bank. The clinic is on the hook to the VC and the VC is on the hook to the bank. Which means that if the clinic goes under, the VC takes the loss because it still has to repay the bank.
(Edit: To be clear, I agree with the other commenters that none of this is what VCs do. I'm just pointing out that the way this is being described doesn't even work on its own terms. Needless to say, LBOs are not "risk free".)
loading story #47356665
If hours of preparation for college testing taught me anything, it's the difference between lend and borrow.