Security Agreement Covering Inventory and Accounts Receivable Securing a Line of Credit

• Category: Loans and Lending - Security Agreements
• State: Multi-State
• Control #: US-0884BG
• Format: Word; Rich Text

Description

Line of credit refers to the maximum borrowing power that a lender extends to a borrower. The borrower may draw required amounts from the fixed amount. Usually, it is a credit source extended to any credit-worthy business by a bank or any financial institution. A line of credit includes cash credit, overdraft, demand loan, export packing credit, term loan, discounting or purchase of commercial bills, etc. A secured transaction is created by means of a security agreement in which a lender (the secured party) may take specified collateral owned by the borrower if he or she should default on the loan. Collateral is the property that secures the debt and may be forfeited to the creditor if the debtor fails to pay the debt. Article 9 of the Uniform Commercial Code covers most types of security agreements for personal property that are both consensual and commercial. All states have adopted and adapted the entire UCC, with the exception of Louisiana, which only adopted parts of it. A Security Agreement Covering Inventory and Accounts Receivable Securing a Line of Credit is an agreement between a lender and a borrower that outlines how the lender can take control of the borrower's inventory and accounts receivable in the case of default on the loan. This agreement is often used when a business applies for a line of credit and needs to provide collateral to secure the loan. The Security Agreement will generally include the following provisions: 1. Description of Collateral: This is a detailed description of the inventory and accounts receivable that are being used as collateral. 2. Borrower’s Rights: This section outlines the borrower's rights to use and sell the collateral. 3. Lender's Rights: This is a description of the lender's rights to take control of the collateral in the case of default. 4. Default: This outlines the conditions under which the loan will be considered in default, and the actions the lender can take in the case of default. 5. Remedies: This outlines the remedies the lender can take to recover any losses in the case of default. Different types of Security Agreement Covering Inventory and Accounts Receivable Securing a Line of Credit include: 1. Purchase Money Security Agreement: This is a security agreement used when the collateral being used to secure the loan is used to purchase the collateral itself. 2. Financing Statement: This is a legal document that is filed with the applicable state government that serves as a public record of the security agreement. 3. UCC-1 Financing Statement: This is a specific type of financing statement that is filed with the applicable state government under the Uniform Commercial Code.

A Security Agreement Covering Inventory and Accounts Receivable Securing a Line of Credit is an agreement between a lender and a borrower that outlines how the lender can take control of the borrower's inventory and accounts receivable in the case of default on the loan. This agreement is often used when a business applies for a line of credit and needs to provide collateral to secure the loan. The Security Agreement will generally include the following provisions: 1. Description of Collateral: This is a detailed description of the inventory and accounts receivable that are being used as collateral. 2. Borrower’s Rights: This section outlines the borrower's rights to use and sell the collateral. 3. Lender's Rights: This is a description of the lender's rights to take control of the collateral in the case of default. 4. Default: This outlines the conditions under which the loan will be considered in default, and the actions the lender can take in the case of default. 5. Remedies: This outlines the remedies the lender can take to recover any losses in the case of default. Different types of Security Agreement Covering Inventory and Accounts Receivable Securing a Line of Credit include: 1. Purchase Money Security Agreement: This is a security agreement used when the collateral being used to secure the loan is used to purchase the collateral itself. 2. Financing Statement: This is a legal document that is filed with the applicable state government that serves as a public record of the security agreement. 3. UCC-1 Financing Statement: This is a specific type of financing statement that is filed with the applicable state government under the Uniform Commercial Code.