Elon Musk Quietly Took $500 Million From SpaceX. An IPO Could Change Everything

The billionaire used low-interest loans to prop up his other business interests.

BY LEILA SHERIDAN, NEWS WRITER

Elon Musk. Illustration: Inc; Photo: Getty Images

As Elon Musk moves closer to taking SpaceX public, the company’s quiet financial endeavors are coming into sharper focus. 

Over a three-year period, Musk borrowed roughly $500 million from SpaceX, using the privately held rocket company as a source of low-interest capital rather than turning to traditional banks, according to internal documents obtained by The New York Times.

The loans carried unusually low interest rates—ranging from less than 1 percent to nearly 3 percent—well below typical bank rates at the time, which hovered around 5 percent. Musk pledged his SpaceX shares as collateral and ultimately repaid the loans by the end of 2021, along with about $14 million in interest. Had he borrowed at more conventional rates, that cost could have been closer to $40 million.

At the center of this arrangement is a simple distinction: SpaceX is private—for now. That status has allowed Musk to operate with far more flexibility, and far less disclosure, than would be possible at a public company.

Vibe-Coding for Beginners in Five Easy Steps

That dynamic, however, may not last much longer. SpaceX is preparing for an IPO, which would require far greater transparency around its finances and governance, according to Reuters. Based on the company’s confidential filings, it could seek a valuation of $1.75 trillion, with a listing around June, CNBC reported, underscoring the enormity of the future IPO. 

Musk has used SpaceX not only as a financial hub for his own endeavors. He has also used it to shoulder the costs of businesses within his broader ecosystem. During the 2008 financial crisis, Musk said he borrowed $20 million from SpaceX to support Tesla. Years later, SpaceX buoyed SolarCity, a struggling solar company where Musk was chairman and a major shareholder, the Times reported. 

By 2015, SolarCity was burdened with over $1.4 billion in debt. Musk arranged for SpaceX to purchase some of that debt, despite internal rules that reportedly prohibited such investments. By 2016, SpaceX had injected $255 million into the company, exposing itself to significant risk if SolarCity had collapsed, according to the Times. 

© Inc.com