You may know this, but that's really not how accounting law or bankruptcy law works, at least in the US. > Imagine a SaaS company which takes out a loan for $1

You may know this, but that's really not how accounting law or bankruptcy law works, at least in the US. > Imagine a SaaS company which takes out a loan for $100k to acquire customers and has $10k in bank at any time. That company is insolvent. That's simply wrong. Many companies have more assets than liabilities; Revlon, for example has around $2 billion in assets and $2.5 billion in liabilities last I looked, but they're not insolvent or in any particular danger of becoming so; the market values them as being worth around $1.5 billion. At least in the US, insolvency is a question of cash flow. Your example SaaS company is able to service its debts and make payroll, thus it is solvent. The fact that it might have negative shareholder equity is quirk of accounting that nobody really worries about. (If you already knew that, my apologies.)