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One Thing Lenders Sometimes Require When Lending Money to a Small

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Essay

One thing lenders sometimes require when lending money to a small corporation is an assignment of the common stock as collateral on the loan. Then, if the business fails to repay its loan, the ownership of the stock certificates can be transferred directly to the lender. Why might a lender want such an assignment? What advantage of the corporate form of organization comes into play here?


Definitions:

Meiosis

A type of cell division that reduces the chromosome number by half, resulting in the production of four genetically unique gametes.

Figure Panel

A segment or section of a larger diagram or illustration, often used in scientific publications to display detailed information or results.

Metaphase II

A phase of meiosis II in which the chromosomes align at the equatorial plate of the cell before being separated into two daughter cells.

Sister Chromatids

Identical copies of a chromosome, connected by a centromere, that are produced during DNA replication and are present until they are separated during cell division.

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