Boot Collateral

Last Updated: Jun 6, 2019

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"Boot collateral" refers to collateral in a transaction where the secured creditor/lender has a security interest, but is not specifically advancing against this collateral. Think of it as extra or bonus collateral in the lending structure. An example of boot collateral would be unencumbered equipment in a revolver only credit facility. The lender could still have a first priority security interest in the equipment, but would not have a specific loan tied to this equipment.