As for "How do I tell who to loan out?", as an EPL side I figure if I'm going to get a player ten to fifteen games with the senior side, its worth keeping him at the club, and if not, then I want to loan him out.
So, at a typical position, I might have the following. (Looking at my current left wingers)
1. 28-year-old, International star - starts my most challenging games (C.L., tough EPL matches, etc.)
2. 25-year-old - experienced quality player. Starts against easier opponents when star is tired. Obviously cover for injury. Gets some Reserve starts to keep him match fit.
3. 19-year-old - my star of the future. Starts Cup games against lower division clubs. I also try to get him in as a substitute fairly frequently, and he's started a few when #1 or #2 is injured. Plays regularly in the Reserves.
4. 20-year-old - out on season-long loan to a top Championship side, for which he's starting regularly. Barely not as good as the 19-year-old (currently), and I'm intrigued to see which of them develops more from it. Has a recall clause, so if there's an injury crisis (or he wasn't starting) I can bring him back.
5. 21-year-old - out on season-long loan to a mid-table Championship side. I've concluded that he's not going to "make it"; he'll never push aside #3 or #4 enough to get a chance here, so I'll probably transfer-list him next summer.
6. 18-year-old - starting in my U-18s. I might try to get him a 3-month loan later in the season, likely at the League One or League Two level. I wouldn't loan him any lower than that.
7. 16-year-old - one for the far future, too young to loan out
IMO, but I'm worried that lack of U-18 time isn't helping his development.
Next year, I'll probably throw the competition for the #2 spot wide open: ideally, I'd like to see #3 and #4 push my current #2 aside and really start getting some serious playing time - even though he'll still be "better" by both attributes and experience at that point.