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This is dealt with using insurance: the band has to borrow their expected cost + the cost of insuring the amount they borrow, somewhat akin to using life insurance to guarantee your spouse doesn't lose the house when you die. Unfortunately, this gets a little complicated when the trigger isn't "disability" or "death", so I can better imagine a band not borrowing money directly from a bank, but from some intermediary that makes the loans and pays for the insurance but demands a cut from tour profits. (Sort of like a record label, but without the assumption that money will be made from selling recordings.) There's no reason such a system couldn't work.

Kyle, you do not live in the real world. You will get cheap earthquake insurance in Tokyo before you'll get intermediaries to risk money on thousands and thousands of (unproven) bands when the chance of failure and zero return on your money is as high as it is in the music business. Neil is dead on with his post.