Security Agreement And Its Purpose

A security agreement is essentially a mutual document between the loan moneylender and the borrower. A business loan backed up by security is called the secured loan. As per the security arrangement, if the borrower cannot repay the loan amount within the predetermined period, the bank can sell the security interest or the collateral to get the value equal to the pending debt.

This arrangement include various primary information’s such as the details of the object which is being used as a security price, details of the proof of ownership of the borrower on the asset which is being used as the guarantee, the period set for the full compensation of the loan amount and the interest rates applicable to the loans, etc.