If my business is valued at a million dollars and I take out a loan for a million, my business is now valued at 0. That’s basic accounting. Amazon had a net income of 14B last year - no one will let them borrow anything close to their market cap, much less 10X it.
Edit: This assumes I spend my loan on payroll which is what the OP originally suggested.
Your original million doesnt go anywhere. If you start with a million and borrow a million, you now have 2 million in assets and 1 million in liabilities. Your valuation is not zero.
No, your edit still ignores something else: at the time you took out the loan, you already had a liability for those employee salaries of $1M, so the $1M valuation means that you had at least $2M in assets.
Acquiring the loan moves you up to $3M in assets (original assets, plus $1m cash from the loan) and $2M in liabilities (employee salaries + $1M loan)
When you pay those employee salaries, you wipe out the salary liability and the $1M cash asset from the loan. This leaves you the original $2M in assets, and the $1M loan, for a net valuation of...$1M.
Basically, the loan ends up replacing the salaries as a liability on your balance sheet.
I think you might be misunderstanding how liabilities and assets work. If your business is valued at 1 million already, it means your assets and liabilities net out to $1M. Taking out an additional loan for $1M just gives you $1M in assets AND $1M in liabilities (assuming this is before interest kicks in)... so your business valuation is actually neutral.
Now, if you squander the $1M and don't generate more than $1M+interest, your business will lose value... but you would have to lose $2M to then increase your liabilities to wipe out your original valuation
Edit: This assumes I spend my loan on payroll which is what the OP originally suggested.