Summer Pools Inc. operates a pool construction and maintenance company in Kitchener, Ontario. Summer has outgrown its current location and is seeking to buy a large piece of property on the outskirts of the city. The company has found land which is vacant but will need to have buildings constructed for showroom and offices as well as storage facility for equipment and machinery.

Summer has had a long financial relationship with RBC. RBC loaned them the start-up money when Summer opened its doors 15 years ago. After 15 years and a wonderful financial relationship, Summer's president, Jackson Summer, goes to meet with the bank manager regarding funding for the expansion process. Given their long-term business relationship, RBC foregoes the application process as it is completely knowledgeable about its financial status. In order for RBC to grant an application, it needs to obtain protection or security for the money that it is loaning.

1. Provide the name and explanation for the security that Summer must provide to RBC to secure the credit? (2 marks)
2. Identify and explain the various methods that RBC can use to reduce its risk in extending credit to Summer. Please refer to the correct documents and terms. (6 marks)
3. Explain how RBC can use the methods referred to in (ii) to obtain money in the event Summer defaults on the loan. (4 marks)
4. What other method of security can RBC use to secure its loan and reduce its risk? (2 marks)