Rav teaches that, “Ha-mekadesh be-milveh, einah mekudeshet – a marriage cannot be accomplished by means of a loan.” This means that if a man lends money to a woman, he cannot tell her that instead of paying back she can simply keep the money if she agrees to marry him. The explanation offered by the Gemara for this rule is that, “Milveh lehotza’ah nitnah – a loan is meant to be spent by the borrower.” The simple meaning for this phrase is that when a loan is given, the assumption is that borrower will spend the money and will pay back different money (albeit of an equal sum) in return. Looking at it this way, once the loan is made, the money does not belong to the lender, and will not become his again until the loan is repaid. Therefore we can well understand that a man (the lender) cannot marry a woman (the borrower) with a loan, since the money that he would like to use to effect the marriage does not belong to him – it is now in her possession to do with as she pleases.
The opposing opinion brought in the Gemara, (which rules that a loan can be used to create kiddushin) believes that, “Milveh lav lehotza’ah nitnah – loans are not made to be spent.” Rashi explains that according to this opinion, a loan is made for a specific purpose, and the lender still maintains a certain level of control over the money, since the borrower cannot use it for whatever he wants.
Tosafot Ri”d, emphasizing a point made in Rashi, argues that the disagreement raised in the Gemara regarding the issue of milveh lehotza’ah nitnah only applies to where the loan is still in the possession of the borrower (i.e. the woman). If, however, the money was actually spent already, all would agree that the loan could not be used for kiddushin, since there is no money actually in existence at the time of the kiddushin.