It is very common to make loans based on using stocks, etc. as collateral. But that isn't what people claim happens with the "buy, borrow, die" loophole. The claim is that these loans have incredibly low interest rates (much lower somehow than the IRS Applicable Federal Rate) and the interest is only payable upon death - which might be decades away. That is how the borrower can supposedly avoid capital gains taxes.

Maybe there are rich lenders who don't understand the time value of money, but doing a quick search, I have not found one stat on how many lifetime loans like this are actually being done.

And that the lender is offering the loan to capture an ultra high net worth investor; so even if you lose money on the interest, you gain on advisory services and fees; plus first bite at holding the accounts of the heirs. Requiring good collateral and high account minimums make the risk for the lender low --- if broad market value drops significantly, the account should still have more collateral to pledge to get back to 1:1. Also, if market value drops significantly, selling shares becomes easier for the investor, as there may be some shares with capital losses, and paying down the loan becomes more attractive.

I know someone who got a mortgage rate way, WAY below prevailing rates (like less than 1%, gotten back when normies like us got rates around ~3%), because 1. he is a very high net worth individual and 2. he owns a business that does a lot of business with the bank. So, he gets extra special treatment because he's rich and the bank appreciates his business and expects the relationship to lead to even more business.

It's not a huge stretch to imagine that Jeff Bezos's bank would happily loan him money at some token 0.01% interest rate or some similar sweet deal.

And the loan terms aren't payable at death on any of the loans, they just let you refi every year when you want another $100M for that year's incidentals.