Floating lien agreements are the least secure form of inventory collateral.

Question

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A floating lien agreement allows the lender to take a security interest in all of a borrower's inventory, including current and future inventory. However, a floating lien is considered to be the least secure form of inventory collateral because the lender's interest in the inventory is not specific or direct, which makes it difficult to enforce if the borrower defaults on the loan.

Floating Lien Agreements Are the Least Secure Form of Inventory