Bank collateral definition
What types of assets can serve as collateral for a bank loan?
Collateral -- assets that can be pledged to a lender in the event of a loan default -- is typically considered tangible property, such as:
- Real estate (personal or business)
- Cash, such as in a CD
- Accounts receivable
However, in many cases collateral can also be augmented by the goodwill you've built with your banker. A business that has performed as promised over the years should expect to have established a level of goodwill that actually adds leverage to the physical collateral.
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