Accounts receivable as collateral, cost of borrowing maximum bank has analyzed the accounts receivable of scientific software, inc. the bank has chosen eight accounts totaling $134,000 that it will accept as collateral. the bank’s terms include a lending rate set at prime plus 3% and a 2% commission charge. the prime rate cur- rently is 8.5%. a. the bank will adjust the accounts by 10% for returns and allowances. it then will lend up to 85% of the adjusted acceptable collateral. what is the maximum amount that the bank will lend to scientific software

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan