A margin loan is very different to the kind of financing agreement a company will enter into. You are using the money at IB to speculate, and probably purchasing volatile assets at that. A company will generally utilise that money very differently, and it is unlikely that a lending institution will accept shares as collateral due to the wrong way risk (i.e. if they can't service their debt, their shares are probably losing value too, so probably not good as collateral).
> A margin loan is very different to the kind of financing agreement a company will enter into
The original post you were replying to talked about founders borrowing against their company's shares as individuals, not companies.
> it is unlikely that a lending institution will accept shares as collateral due to the wrong way risk
That's my point: Nobody's getting a special financing deal on their company stock as individuals to eliminate their margin call risk.
Multi-billion dollar hedge funds get a personal contact at the bank, but even they will get margin-called borrowing against stocks as collateral if it goes against them.
He might not be speculating, he might be holding a bunch of SPY shares and simply withdrew $150k as a margin loan so he can make a purchase on a house or car but not pay taxes on gains yet from selling his shares, opting instead to pay off the loan over time through regular deposits.
He is still speculating on the SPY and his ability to pay off the loan depends on how the SPY holds its value. A market crash would hurt his ability to pay off the loan.
No it doesn’t. His loan is the same no matter what SPY’s value is. He pays it by depositing money he earns from his day job, not by selling shares. If SPY crashes very hard his broker may force him to pay the loan very quickly, either by adding more money or by selling off his shares to cover the loan.
