collateral
n. uncountablen. something valuable you promise to give a bank if you cannot pay back a loan. If you fail to pay, the bank takes this item to get their money back.
n. an asset pledged by a borrower to a lender as security for a loan. If the borrower defaults on their payments, the lender has the legal right to seize the asset to offset the loss.
He used his house as collateral for the business loan.
The bank required the small business owner to provide significant collateral before they would approve the expansion credit.
In high-stakes corporate finance, the quality and liquidity of the collateral often determine the interest rate and the overall risk profile of the lending agreement.
Recorded since c.1378, from Old French, from Medieval Latin collaterālis, from Latin col- (“together with”) (a form of con-) + the stem of latus (“side”). By surface analysis, col- + lateral.
Commonly used with the preposition 'as' ('as collateral') or 'for' ('collateral for a loan').