What does it mean for a new business loan to be collateralized?
A)Should the business fail, the loan is simply not repaid.
B)The lender may sell a specific asset to recover the loan.
C)The borrower does not pay interest on the loan.
D)The borrower only pays interest when the entire loan is due.

Question

Quizplus · Accepted Answer

When a loan is collateralized, it means that the borrower has put up a specific asset, such as property or inventory, as security for the loan. If the borrower fails to repay the loan, the lender has the right to seize and sell that asset in order to recover the outstanding amount owed.

What Does It Mean for a New Business Loan to Be