Typically a small lender will seek the services of a larger lender for the purpose of providing a short term loan to meet the growing demands of a smaller lender. In some instances, the larger lender will assume the role of servicing the smaller lender's portfolio until such time that the re-discounting loan is paid in full. This is held for the purpose of covering non-performing invoices. Security Interest - A creditor that holds a perfected right or lien in an individual or company's existing assets either in part or entirety. Specific Collateral - A single form of security provided to a lender for the purpose of a short term or long term loan.
Specific collateral includes items such as an automobile, a piece of equipment or inventory.
Subordinate - To assign one's collateral position whether in full or in part to another to exchange one's security interest over another. If approved, the Federal Court will place the lender in front of all other creditors with the intent to benefit all the creditors. Term Loan - A loan that is made to an individual or a company over a long period of time, typically 12 months or more. The Three C's of Banking - Credit, Capacity and Character. These are the three primary areas of which a bank focuses before lending to its borrower.