Several types of inventory loans are available. In a floating lien or trust receipt arrangement, the borrower
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Several types of inventory loans are available. In a floating lien or trust receipt arrangement, the borrower holds the collateral. In a floating lien arrangement, the lender has a general claim on all of the firm’s inventory. In a trust receipt arrangement, the inventory being used as collateral is specifically identified by serial or inventory code numbers. In a terminal warehouse and a field warehouse arrangement, a third party holds the collateral; in the case of a terminal warehouse arrangement, collateral is stored in a public warehouse, whereas in a field warehouse arrangement, collateral is stored in a field warehouse located on the borrower’s premises. LO1
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