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Bank collateral definition

Question
What types of assets can serve as collateral for a bank loan? 
Answer
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)
- Equipment
- Cash, such as in a CD
- Inventory
- 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. 
Brain Trust contributor: Author of Hurdle: The Book on Business Planning President, Palo Alto Software
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