Document giving a lender a Security Interest in assets or property pledged as Collateral. This agreement, signed by the borrower, describes the collateral and its location in sufficient detail so the lender can identify it, and assigns to the lender the right to sell or dispose of the assigned collateral if the borrower is unable to pay the obligation. The security agreement may contain loan Covenants governing the advancement of funds, and a schedule for repayment of principal and interest, or require the borrower to obtain insurance coverage for the assets pledged.
The security agreement may cover nonpossessory liens in intangible property such as accounts receivable, or a possessory lien, in which the lender holds the collateral, for example, stock certificates, until the loan is fully paid. In some loans, the security agreement is also the Financing Statement filed with a public records office, if it has the signatures of both borrower and lender.
