To obtain working capital, Mining Company puts up all of its equipment as security to borrow $100,000 from National Bank, which agrees to advance up to $100,000 more in the future. The bank properly perfects its security interest. To use the same collateral as security for a future advance, the bank must
A)execute a new security agreement.
B)re-perfect its security interest by possession.
C)none of the choices.
D)file a new financing statement.

Question

Quizplus · Accepted Answer

Under UCC Article 9, a security interest can secure future advances without the need for a new security agreement or additional perfection steps, as long as the original security agreement covers future advances and the security interest is properly perfected initially.

To Obtain Working Capital, Mining Company Puts Up All of Its