One thing lenders sometimes require when loaning money to a small corporation is an assignment of the ordinary equity as collateral on the loan.Then,if the business fails to repay its loan,the ownership of the stock certificates can be transferred directly to the lender.Why might a lender want such an assignment?
What advantage of the corporate form of organization comes into play here?

Question

One thing lenders sometimes require when loaning money to a small corporation is an assignment of the ordinary equity as collateral on the loan.Then,if the business fails to repay its loan,the ownership of the stock certificates can be transferred directly to the lender.Why might a lender want such an assignment?
 What advantage of the corporate form of organization comes into play here?

Quizplus · Accepted Answer

The Answer of One thing lenders sometimes require when loaning money to a small corporation is an assignment of the ordinary equity as collateral on the loan.Then,if the business fails to repay its loan,the ownership of the stock certificates can be transferred directly to the lender.Why might a lender want such an assignment?
 What advantage of the corporate form of organization comes into play here?

One Thing Lenders Sometimes Require When Loaning Money to a Small