a subordinate or accessory part. a side branch, as of a blood vessel or nerve. collateral circulation. a relative descended from the same stock, but in a different line. accompanying; auxiliary: He received a scholarship and collateral aid. additional; confirming: collateral evidence; collateral security. secured by collateral: a collateral loan.
What is a collateralized loan?
Collateral is an item of value pledged to secure a loan. Collateral reduces the risk for lenders. If a borrower defaults on the loan, the lender can seize the collateral and sell it to recoup its losses. Mortgages and car loans are two types of collateralized loans.
Can equipment be used as collateral?
Equipment: Using equipment as collateral is called asset-based equipment financing. This is a strategy that can be used by companies as a fast way to obtain capital based on the collateral that they already own and want to either refinance or buy with a significant down payment. Cash: Borrowers often pledge cash to secure a loan.
