A business example
A business offers a warehouse as security for a loan.
Asset
Identify the warehouse, ownership records and existing interests.
Secured obligation
The documents connect the security to specified borrowing obligations.
Value and risk
The lender assesses the asset and the terms governing enforcement.
What this shows
The warehouse supports the borrowing arrangement. Its estimated value does not erase the debt or guarantee an eventual sale price.
What it is often confused with
Giving collateral does not cancel the debt if the collateral loses value.
What to look at in your business
Identify the secured obligation, asset ownership, valuation and enforcement terms.
Context and further reading
This entry explains the business term. The related guide below provides the next layer of context; any applicable legal test depends on the transaction and relevant period.
Kosha.Services · Updated 2 October 2026