The lending was disclosed in Tesla's prospectus on Thursday to raise up to $2.3 billion (roughly Rs. 16,000 crores) with new shares and convertible debt, and it was $117 million less than the personal loans to Musk disclosed in Tesla's previous prospectus in 2017.
Still, Tesla said that if the price of its stock falls and the banks force Musk to sell some of his shares, that could create additional pressure on the stock.
Tesla jumped over 4% after Tesla disclosed capital raising plans, which soothed investors' recent concerns about the Palo Alto, California company and pulled its stock up from two-year lows.
Musk, who owns 20% of Tesla, has taken personal loans from Wall Street banks for years. A Tesla 2017 prospectus showed $624 million in loans to Musk.
The filing on Thursday showed Musk owed money to three banks working on the capital increase.
Goldman Sachs Group Inc has $213 million in loans outstanding to Musk, while he owes Morgan Stanley $209 million, and another $85 million to Bank of America. Goldman was not mentioned as a personal lender to Musk in the 2017 filing.
Those loans are backed by Musk's shares in Tesla, currently worth a total of around $8 billion. If Tesla's stock declines, then Musk could be forced to sell some of those shares under terms of the loan, according to the Tesla filing.
Mark Williams, a professor of finance at Boston University, said that investment banks can run into conflicts of interest with their deals with companies, their founders and CEOs, testing their rules to keep different businesses separate.
"This is particularly true in the case of Tesla where you have an aggressive and vocal CEO who is prone to pushing the legal limits and gain terms that might run counter to Goldman's conflict of interest policies," Williams said.
Goldman and Citigroup, the top-line book runners in Thursday's capital raise, both have "sell" ratings on Tesla's stock, which is unusual but not exceptional on Wall Street.
At the end of 2018, Musk and his trust had 13.4 million Tesla shares pledged as collateral for personal debts, according to another filing. That is down from 13.8 million shares at the end of 2017.
Tesla, Morgan Stanley and Goldman Sachs declined to talk about the loans. Tesla has a policy that caps executives' borrowings at a quarter of the value of the shares pledged as collateral.
With Tesla repeatedly pushing back forecasts for turning a profit, its stock has dropped 27% year to date.
Musk plans to buy another $10 million worth of shares as part of the sale announced on Thursday.