After graduating, a student set up a business as a systems analyst. His monthly billings are healthy, about $10,000 a month. He rents his office, hardware, and furniture and owns few assets. He rents his apartment, has no car, and spends most of his income on concerts. If he approaches you, a bank manager, to borrow $50,000 for the purpose of increasing his working capital, which of the following securities would you most likely request?
A) Assignment of accounts receivable
B) Security under sections 426 and 427 of the Bank Act
C) Conditional sale contract
D) Floating charge debenture
E) Chattel mortgage

Question

Quizplus · Accepted Answer

Since the student's business is service-oriented, he does not have any tangible assets to provide as security. However, he does have monthly billings which could be assigned as collateral. Therefore, the best choice would be to request an assignment of accounts receivable.

After Graduating, a Student Set Up a Business as a Systems