If a borrowing firm does not qualify for an unsecured bank loan and pledges its accounts receivable as security, it must execute an assignment of these accounts to the bank.

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If a firm pledges its accounts receivable as security for a loan, it must execute an assignment of these accounts to the bank. This means that the bank has the right to collect the amounts owed on these accounts in the event that the firm defaults on the loan. This is known as a secured loan, as opposed to an unsecured loan where no collateral is provided.

If a Borrowing Firm Does Not Qualify for an Unsecured