Protective Advance

Last Updated: Jun 7, 2019

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A Protective Advance is an advance by the lender to the company for the purpose of protecting or preserving collateral when the company failed to or is unable to meet its obligations. Protective Advances often occur close to or during a liquidation. At this point, the borrower is of lessor importance and the priority is to preserve collateral for maximum recovery. Examples are advances to pay for insurance covering the collateral, repairs/maintenance to the collateral or payroll to complete a project/shipment.