👉 Collateral refers to any financial asset or security that is pledged as a guarantee of repayment from another party. Collateral can be anything, such as assets such as securities, accounts receivable, or other types of property, but it must be collateralized by some form of security or guarantee. This means that the borrower needs to provide evidence of the value and quality of the collateral in order for them to have a safe and reliable repayment plan.
