The towel is not a loop. When you pull down you get fresh towel off of a roll. The used towel goes onto a different roll and when the clean roll is used up they change it and wash the dirty one. They are geared together so the amount hanging down is pretty constant but sometimes they got out of sync and the “loop” was either huge or so tight you couldn’t really dry your hands.
It’s not a loop, there’s a fresh towel roll and a dirty towel take up roll and it only rolls on one direction. You changed it when the clean roll ran out and washed the dirty roll.