Is it legal to seek a loan against locked up public stock?
But because the bank is in the business of making mortgages against property, it won’t consider the shares as security in most cases. It may consider them as positive evidence in favor of one’s ability to service a mortgage, much like it would consider your income as evidence of ability to service the mortgage. It doesn’t have recourse against your income in event of a default.
(California is a no-recourse stage; talk to a real estate lawyer or similar professional if you are curious on the precise application to your situation, HN.)
Some market standoff agreements might prohibit using stock as collateral, but plenty don't. I chatted with an ibank willing to lend me money against locked out shares to buy a home with.
So yes, ibanks will loan you money, because they don't care if you violate the lockup agreement. This should probably not be surprising, and it's buyer beware if you do.
If it's something like this one (https://blog.wealthfront.com/post-ipo-dilemma-hedging-stock/), where you have clauses like " enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock or such other securities" exist, I agree using as loan collateral is pushing the limits, if not past it.
Many companies have much simpler language. Mine was just "will not sell or otherwise dispose of shares", which permits not only loans, but more powerful techniques like hedging.