A loan agreement with collateral is a contract between two parties in which one party (the lender) provides a loan of money to the other party (the borrower), and the borrower agrees to secure the loan by providing an asset as collateral for it. The lender has the right to take and use the property if the borrower defaults on the loan. This type of loan is often used in business and investment contexts, where large sums of money are involved and repayment may be uncertain. It offers a degree of security to both sides that helps to facilitate the loan agreement.