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What does it mean for a new business loan to be collateralized? a. Should the business fail, the...

Question:

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.

Answer and Explanation:

When the new business loan is to be collateralized, this means that the lender may sell specific asset to recover the loan. Letter B.

This arrangement means that the business you will be creating from the loan will be the same thing that you will collateralize for the loan itself. In other words, the business itself may be controlled by the lender upon default.


Learn more about this topic:

Collateral: Definition, Types & Examples

from Introduction to Business: Homework Help Resource

Chapter 22 / Lesson 17
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