I guess it’s still a question of borrowing money for a speculative investment, you just get a significant discount that makes profit more likely.
Depending on your indebtedness (outstanding student loans, mortgages) savings and current earnings a bank could still refuse to lend you enough money, if at all
If you’re making a high enough salary to be getting enough options that you can’t afford to exercise them, you’re making enough to borrow about $100k.
I had no trouble getting an uncollateralized loan at a reasonable rate for $75k; and I had $100k in student debt, a $500k mortgage and little else in the way of assets. And when I say “no trouble” I mean I applied for the loan, was approved 30 minutes later and had the money in my bank account within 2 hours. That loan is paid off now, but if your income is high enough banks will lend you money on that alone (I was making an equivalent salary to a principal developer at the time).
If you’ve ever taken any risk with credit and failed or simply had a disruption in income anytime in the last 10 years prior you would have been denied.
Its nice everything worked out for you, that has nothing to do with your ability to perceive a simple solution available to you.
The only risk is that one exercises the options, but by the time one sells the shares (which they got as the result of exercising options), the price of the stock falls below the strike price. To avoid this risk, do a quick sell after exercise. This makes risk minimal; in case of bigger companies effectively zero.
Bigger risk comes in if someone wants to do an exercise and hold to sell much later, which can bring tax advantages. But this is a different game entirely. In the case of employee with little spare cash (to the tune of borrowing money for the exercise), not doing exercise and sell is really leaving money on the table. My 2c.
You missed the point that many people with good finances are denied credit. They cant get a $75,000 loan. Thats the only point I was making. The person provided no insight whatsoever and was unable to see that their experience is different.
One thing I learned during the dot-bomb era is think hard about holding too much of your company's stock and, especially, think really hard about exercising options and then not selling. Fortunately the stock drifted back up a ways over time and then my former company was acquired for a nice spike. So between that and tax loss offsets, I didn't do that bad. But I've been careful since. (Of course, more recently, I'd have been better off holding more for longer but I can't really complain.)
If it's to exercise at the close of a deal, the acquirer could also setup a loan too. I had options which were subject to revesting (lame, but worked out ok), and the acquirer fronted the money to exercise everything that wasn't already exercised and then took payments automatically when the chunks vested. Because of the strike prices we had, it didn't feel very risky.
Regular startup employees borrowing and buying their stock options is far riskier than them borrowing to do options trading in publicly traded stock markets because they have very little information about their company's future prospects.
What goes on between the founders, board, current investors and likely future investors is likely known to very few amongst them, if at all.
Even if you believe strongly in the product and know the market-fit is bang on, you don't know if the option is currently priced correctly.
