Secured Sources of Short-Term Loans
Secured Short-Term Financing is obtained by pledging specific assets, usually accounts receivable or inventory as collateral
A Security Agreement specifies the collateral held against the loan, the terms of the loan, interest rate, and other loan provisions
Although collateral reduces the risk of loss if the borrower defaults, the risk of default remains the same, thus making secured loans riskier in the view of the lender
- 1994, HarperCollins Publishers