| There are infinite numbers of types of collateral as | | | | engineering firms and at agreed price assumptions and |
| virtually anything can be used for such purpose as long | | | | any discounts applicable can be used as collateral for |
| as it is acceptable to the lender. The nature of | | | | certain types of loans, especially long term loans and |
| collateral acceptable for any loan would depend on the | | | | project-tied loans. The borrower is assumed to be the |
| type of loan, structure, tenor, amount, etc. The following | | | | owner or is in control of such natural resources. |
| are some of the common types of types of collateral | | | | 4. Marketable Securities |
| usually demanded and accepted by commercial loan | | | | Stocks/Shares and Bonds of quoted blue-chip |
| lenders. Real Estate (Land and Building), Plant and | | | | companies, certificates of deposits (CDS), treasury |
| Machinery, Natural Resources (oil and gas reserves), | | | | certificates and other similar marketable securities, |
| Marketable securities (Stocks and bonds, Certificate ot | | | | which can be readily converted to cash, may be used |
| Deposits, etc), Crops and Livestock, Inventory, | | | | as collateral for short term loans. The amount of loan |
| Accounts Receivable, etc. | | | | extended would depend on the value of such |
| 1. Real Estate | | | | marketable securities with some margin or discount to |
| Land and Building represent one of the commonest | | | | cushion any adverse fluctuations on the market value |
| types of collateral in use especially for term loans and | | | | of such securities. For the lender to adequately protect |
| revolvers. These can be houses, office building, | | | | itself the borrower should duly execute all the |
| shopping centers, warehouses or factory buildings. | | | | necessary transfer forms though undated and, his |
| Real Estate will be ideal as collateral for medium to | | | | signature under seal duly verified by the relevant |
| long-term loans. | | | | registrars for share certificates used as collateral. |
| 2. Plant and Equipment | | | | These should be completed before the loan is |
| This refers to manufacturing plant and machinery, | | | | disbursed to the borrower. The essence is that if the |
| trucks, generating set, drilling rigs, presses, forklifts and | | | | loan goes bad for whatever reason, the lender will be |
| similar items. These are usually appropriate collateral | | | | in a good position to realize on such securities without |
| for term loans, revolvers, working capital loans, | | | | recourse to the borrower. |
| syndications. It would be advisable to obtain a | | | | 5. Inventory |
| professional valuation of the plant and machinery for | | | | Inventory can be used as collateral in five common |
| use as collateral to enable the lender ascertain the | | | | ways as asset-based financing: Floating Lien, Trust |
| appropriate amount of loan to sanction. | | | | Receipts (floor planning), Chattel Mortgage, Terminal |
| 3. Natural Reserves | | | | Warehouse and Field Warehouse Receipts,Bad Credit |
| Oil and Gas reserves as estimated by qualified | | | | Personal Loan Source. |