Question

What is collateral? why is it necessary?

Answer 1

collateral is an asset that a borrower owns and is given as a guarantee of future repayment to lender
it is important as through it the lender is assured to receive his money either from borrower or selling the collateral

Answer 2

traditionally collateral has been considered an important part of qualifying for a small business loan.Intact ,it's one of the five Cs used by the many traditional lenders to help them evaluate a potential power.....
Hope it will be helpful