What is Collateral Surety?
Collateral surety is a commercial paper that is issued as a guarantee or pledge of collateral in exchange for the issuance of a loan. Any number of assets may be pledged as collateral for the loan, subject to the approval of the lender. Often, a company will choose to pledge assets that are valuable, but are not essential to the core operation of the business. The point of the declaration of collateral surety is to provide the lender with the assurance that even in the event of unanticipated reversals, the borrower will still be able to honor the debt. By providing a specific listing of the assets that will serve as collateral for the loan, the receiver also demonstrates intent to honor the debt regardless of future circumstances. For the duration of the loan period, any assets that are included in the collateral surety will not be sold or altered in any fashion, without the express permission of the lender. In the event that the value of one or more of the assets listed as collateral
