Security Agreement
What does it mean
A Security Agreement is a document that gives a lender a collateral interest in certain types of assets.
Why does it matter
Security Agreements are one of the most common collateral documents used by a banker. Security Agreements are used to collateralize certain types of assets such as: Accounts Receivable, Inventory, Equipment or Crops. The Security Agreement document represents the borrower granting the bank permission to take a lien on certain assets as collateral. After the Security Agreement is signed, the bank must perfect its security interest by filing a UCC, taking possession of the collateral or other methods. The method of perfecting a security interest varies by the type of collateral.
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