Modern Counsel for Growing Companies
In plain English
Property pledged to secure an obligation. A creditor with an enforceable security interest or lien may have rights against that property if the debtor defaults. Collateral provides a source of repayment but does not necessarily limit the debt or eliminate a separate personal guarantee.
Types and key distinctions
Cross-Collateralization
An arrangement in which property secures more than one debt or supports obligations beyond a single transaction. It can connect risks that owners intended to keep separate across assets or entities. Reviewing collateral and guarantee provisions together is essential to understanding the actual reach of the lender's rights.