The Going Out of Business Phase

Since moving back to Louisville, I've gotten in with a small group of entrepreneurs. One of them married my sister, so I see him from time to time and we always talk about business. We are all involved with young struggling companies, and it made me wonder about the actual going-out-of-business phase. It will probably happen to at least one of us. Has anyone actually been through this? I wonder for example, at what point can you no longer get bank credit?

For example, we have over a half million dollars in loans. We aren't profitable, but we lose a little less each month. This could be the month we breakeven, or maybe not. But somewhere down the road there will come a time when we can't lose money anymore. If we reach that time, will a bank loan us anything?

I just keep thinking that we were 15% over on the cost of this project. What happens to companies that mis-estimate, don't ask for enough cash, and then have no collateral to use to get working capital? Do banks just let them die? We had this discussion the other day, because as I said, one of us will surely go through it. I would love to know more about it (without actually having to live it).